Dealing with unemployment can be a stressful time in your life and you will need to spend some time reworking your budget and ensuring that you are meeting your debt obligations. If you have an auto loan, it is even more important to prioritize your baseline expenses and make sure you are setting aside enough of that unemployment check to cover loan payments —or risk losing your vehicle.
Here are some things you can do to manage your auto loan payments when you’re suddenly unemployed:
Review Your Budget
You may need to reconfigure your budget to account for the income change and break down all of your current baseline expenses that need to be covered for you to stay afloat. These include minimum payments on credit cards and your auto loan payment. Determine what this baseline amount is and how much you have available for any extras. Paring down your expenses temporarily can help you prioritize your expenses and ensure you don’t lose your car or home while you are unemployed.
Talk to Your Lender
Some lenders may be willing to negotiate more affordable payment terms so don’t be afraid to share your current financial situation with your lender. Even though you are unemployed, you can still make monthly payments on your auto loan —and protect your credit score during the process. Talk to your lender about possibly restructuring the loan term and payment plan so that you don’t default on your loan. Remember that it is also in their best interest to negotiate so that they still receive timely payments.
If you can’t get a better rate on your loan but still want to keep your car, consider some different ways you can pare down other expenses. This might be a good time to consider renting out a room in your home or even moving to a more affordable place. You could cut out extra lifestyle expenses such as a gym membership, dining out expenses, and your gas budget. Find ways to save money on day-to-day expenses so that you can still make your car payment on time. Remember that downsizing your lifestyle may only be temporary until you get back on your feet, so any sacrifices you make now will pay off in the long-run. If maintaining your vehicle is a higher priority for you, consider what types of expenses can be a lower priority right now and work with the income you do have.
Sabah Karimi is a professional freelance writer and digital copywriter. She writes personal finance, small business, and marketing content for several mainstream websites and has an educational background in business and marketing.She also writes beauty, fitness, travel, and lifestyle content for private clients.Follow her on Twitter @Sabahk