First Of All - No Need To Panic
According to the latest Federal Reserve report, millions of Americans have already lost their jobs and the worst is yet to come.
Economists have clearly stated that this is probably the worst impact experienced by the American economy in the last 70 to 100 years.
If you have a piling car debt, don’t panic as you aren’t the only one. At this point, many other borrowers are in the same boat.
The government has already passed directives on how the current debt scenario needs to be handled.
Car dealerships and lenders are increasingly allowing deferments, forbearance, and many other options over the next several months.
Communicate With Your Lender
If you’re struggling to balance your monthly payments during this tumbling economy, the first thing you should do is talk to your lender.
If you let the lender know about your current financial status, they should be able to recommend you a temporary fix like a forbearance or a deferment.
It is important to contact your lender because:
- Discussing the situation can help you come up with an effective solution.
- You might be eligible for the COVID-19 plans launched for borrowers.
- It lowers the chances of you defaulting on payments and losing the vehicle.
- It ensures that your credit score won’t be damaged excessively.
As a matter of fact, most lenders have stepped up and ensured that all existing customers who are facing temporary hardship can request one of the many options either online or via phone.
Contact Your Credit Union
Similar to lenders and dealers, credit unions have also encouraged customers to contact their respective branches without hesitation.
In fact, credit unions like America First, Navy Federal, and the likes have listed all the available relief measures on their websites.
Eligible customers can avail multiple options like loan extensions, deferment, pandemic-relief loans, financial counselling, and more.
If you’re a member of a credit union, speaking to the concerned authority can help in many ways.
- You’ll be able to apply for loan extensions, forbearance, deferment, and other plans.
- You can also get additional benefits like interest-free extension periods, low-rate refinance loans, line of credit extensions, and more.
- You’ll get quicker approval because of an existing relationship with a credit union.
- You can steer clear of the bad debt cycle and further consequences like repossession.
Check Out Solutions From Ford, Toyota, And Nissan
We are all together in this and renowned car brands have also come up with multiple plans to cater to their customers.
- Ford - Existing customers affected by COVID-19 who have purchased or leased vehicles are encouraged to contact and discuss payment options. For instance, you can adjust a due date for payments or postpone a payment. New car buyers can now delay payments for 90 days.
- Toyota – The company has urged all customers to connect with the respective departments and avail payment relief and lease-end assistance. For new customers, they are offering a 90-day deferral period for cars purchased between March 18th through May 4th, 2020.
- Nissan – This automaker is also offering payment extensions for retail and lease customers on a case-by-case basis. New customers can also get a 90-day delayed payment option alongside a special APR and payment coverage for two additional months.
Other Solutions
Apart from the measures listed above, there are some other solutions that you can try if things didn’t work out as expected.
- Dip Into Savings – If you have a savings account, you can use some of the funds to temporarily manage your outstanding car payments. If you miss payments, it will reflect on your credit score. This might make it difficult to get approval for new loans. Hence, using these funds can help you better manage the debts during these critical times.
- Miss Some Payments – Most lenders won’t disagree with letting you miss one or two payments if you agree to pay the additional interest and charges. Missed payments will impact credit scores, but you can recover it once you start making timely payments. Speak to your lender to understand the terms of your loan account.
- Sell Your Car – If the resale value of your vehicle is more than the amount you owe to the lender, selling your car can help you pay off the remaining balance. Talk to your lender to understand if there are foreclosure fees.
Conclusion
If you see a sharp dip in your income, you should immediately contact lenders.
When you miss payments without prior communication, chances are that the lender will repossess the car.
Besides, your credit record will also be impacted.
Be sure to stay up to date on the latest developments by following the news to see if new relief measures are rolled out.
