What To Do When You Can’t Make Your Car Payments Anymore

Life can be unpredictable, and sometimes, finances can get a little tight. Job loss and unexpected expenses may affect your ability to repay your debts, leading to mounting bills that become difficult to pay. 

If you can’t make your car loan payments, the worst thing you can do is ignore the problem; it’s best to tackle the situation head-on, as there are solutions to manage your debt that may help you through the struggle and get you further ahead in the long run. 

What Happens if You Don’t Repay Your Car Loan?

Before we address possible solutions for when you can’t repay debt, let’s look at what will happen if you don’t make your loan payments in full and on time. (Remember, these are worst-case scenarios and can often be prevented, and we’ll show you how later in this post!)

Your Car May Be Repossessed

In the case of missed payments, most lenders will wait until your loan is delinquent. A delinquent loan is one where a payment hasn’t been made for at least 60 to 90 days, after which time, your lender will likely take action. These actions may include repossessing your car to recover their losses. 

Your Credit Score Will Be Affected

If you haven’t made a monthly payment for 60 to 90 days, this will negatively affect your credit report. Missed payments will bring your credit score down and be reported as a delinquent loan in your credit history. These two factors may affect your ability to get a future loan, and even if you can, your costs of borrowing will be higher. 

Talk to Your Lender

If you are having difficulty making your loan payments, contact your lender. Lenders are usually very reasonable; they don’t want to repossess your car and go to the trouble of selling it, but would rather figure out a solution so you can keep your car and repay the loan.

If you are between jobs and can’t make the payments, there is a possibility your lender may defer them. Or, if you’ve had a change in circumstance and the payments are no longer affordable, they may simply reduce the payments in an effort to recover most of the costs. For any of these strategies to work, it’s best to contact your lender as soon as you run into problems so you can work out a solution and keep your car. 

How to Manage Your Car Loan Payments

Refinance Your Car

One way to reduce the monthly payments on your car loan is to find alternative options for car financing. If, for example, you are two years into a five-year loan term, refinancing a car loan can help to spread the remaining balance of the loan over a longer term. This will help to lower your monthly payments, making it easier to manage your debt. 

Take Advantage of Lower Interest Rates

If your interest rate was high when you took out your original loan, refinancing your auto loan might be a good solution to take advantage of a lower interest rate. We advise our clients to wait at least one to two years before refinancing, as a consistent record of making monthly payments looks good to lenders and also improves your credit score. 

The combination of spreading the balance over a longer payment period, coupled with lower interest rates, will make your loan easier to pay off. 

How Insta Auto Solutions Can Help

If you are having difficulty with your car loan payments, call us! We are always here to support our existing customers, but we can also help if you purchased your car and financed it at another dealership. Selling vehicles is just one part of what we do; we are equally invested in your financial health and helping you build good credit. 

Taking the Time to Get to Know You

We understand that each situation is unique, and there may be several factors to consider. Our financing experts will take the time to assess your situation and provide options that can help. 

Focused on Building Your Credit

At Insta Auto Solutions, we appreciate the importance of building good credit. Credit forms the foundation of our material lives as it allows us to purchase homes, fund our hobbies, and set up businesses. This is why our finance team works hard to set up a financing strategy that works for your budget and builds your credit at the same time. 

We Have Great Relationships with Our Lenders

It’s in your interest to have a wide pool of lenders to choose from so you can get the best loan terms and the best interest rates. Our finance managers have developed great relationships with a host of lenders so we can serve you better.

We Are Your Negotiators

Our finance team is made up of experts in negotiation. We have experience with how each lender works and use this knowledge to your advantage. Our priority is to get the best financing deal for you, so we will negotiate with lenders until we know you’ve got the best deal. 

Trade in Your Car for a Less Expensive One

If you are unable to make your car loan payments, you may want to consider trading it in for a cheaper one. This is ideal if you have paid off enough of the original debt and can afford to pay for something less expensive. We can help you trade in your car so you can manage your debt better.

How Does a Trade-In Work?

With a trade-in, we will buy the car from you, and you can put your equity towards your new car and finance the rest. Picking something less expensive will make it easier to manage your debt, so you don’t run into problems in the future. If you would like to know how much your car is worth, use our trade-in tool. You’ll need your Vehicle Identification Number (VIN), or the make, model, and year of the car to find out its value. 

Refinancing a Car Loan With Bad Credit

 A bad credit score won’t prevent you from securing a loan. Even if you do suffer from bad credit, we can still work with you to refinance your auto loan. Our finance experts will secure the loan amount you need, but you’ll have to pay a high car loan interest rate with bad credit. 

Rebuilding Your Credit with a Bad Credit Auto Loan

Bad credit car loans are a great way to purchase a vehicle, even if you have a poor credit score or a limited credit history. These loans are ideal if you are a student, new to Canada, have filed for bankruptcy, or suffer from poor credit. 

How to Get Approval For a Car Loan

At Insta Auto Solutions, we’ve made it easy for you to apply for a car loan. It only takes a few minutes to submit your application online, so we can review it and then move to the next step.

Step 1 - Gather Your Documents

You will need to submit a government photo ID. A Driver’s License or provincial healthcare card can be used. You will also need an employment letter to show proof of employment or several months of pay stubs. Keeping bank statements on hand can also help. 

Step 2 - Get Pre-Approved for Your Loan

The approval process has no impact on your credit score, and you can use this information for your next lease or purchase. 

Step 3 - The Approval Process

Our finance team works quickly and can often give you an answer on the same day you submit your pre-approval form! Once you know how much you are pre-approved for, it’s time to look for your car.

Step 4 - Factor in Your Costs

When you are looking for a car, keep all of your costs in mind. These include insurance costs, gas, and maintenance on top of your monthly loan costs. 

Your Auto Financing Experts in Alberta

If times are tough and you’re struggling to make your auto loan payments, call our team of experts at Insta Auto Solutions. We’ve helped so many clients who have found themselves in a tight spot financially, and more often than not, we’ve found a solution! The most important thing is to be proactive, as the decision you make affects your immediate future as well as your ability to secure future loans. Contact us today, and let’s discuss alternative options for car financing.