Can't Afford your Car Payments Anymore? Here's What To Do

Posted on October 19, 2022

Sometimes you end up stuck in situation where you can't afford your car payments anymore. Whether you bought a car out of your price range, or your financial situation changed, you don’t want to end up defaulting on a loan, and you need a quick escape, here are some of your options. 

Renegotiate the Loan

If you find yourself in this situation then the first thing you should try is renegotiating the loan. Go back to the lender and tell them about the situation, there’s no reason to lie here since it doesn’t benefit them for you to default on the loan either. You may be able to defer the loan payments for a time, which could give you the time to save up the money and repay the loan.

Or you may be able to extend the loan terms, resulting in smaller monthly payments that you have a better chance of repaying, though bear in mind this will increase the price of the loan overall.

Refinance the Loan

If renegotiation isn’t doing the trick then you have the option of taking your business elsewhere and refinancing the loan. This option is ideal if your credit situation has improved since the time that you got the loan. You may be able to reduce the interest rate to lower your monthly repayments, or same as the previous, stretch out the loan term to have the same effect. Best of all would be combining both.

Sell The Car

If it really gets down to the wire and you just can’t afford your car payments anymore then you’re just going to have to sell the car, but you have a few ways you can go about it. The easier option is to trade the car back to the dealership where you initially bought it, since they will handle most of the paperwork for you, however you won’t get as much back for it as you would for selling it privately.

Selling it privately is more complicated as you need to get the proper paperwork from the lender and of course go through the process of selling a car privately. Unfortunately regardless of which option you choose you’ll still have some trouble if the loan is upside down, meaning it’s worth more than the car. You may end up with a lump sum to pay off the loan even after the car is sold.

In that scenario you may end up with a loan to cover a loan, which is a dangerous spiral to be in, but at least it’s a smaller loan than the original.

if you can't afford your car payments and want an easy and quick way to sell your car for good money, give us a visit at Car Nation Canada. We’d love to buy it and we don’t even need you to buy another car from us. Thanks!