If you’re feeling overwhelmed with bills lately and your car loan payments are putting a dent in your budget, take some time to review your loan agreement. Whether you’re dealing with overdue payments or just want to be more organized with your finances, you do have some options that you might have overlooked.
Here are some important tips for managing your car loan:
Request an Extension for Payments
Many creditors will be willing to work with you to get an extension on payments so that you don’t end up defaulting on the loan. If you are working through a rough patch financially and just need some time to catch up on payments, talk to your finance company about getting an extension without any penalties. You’ll save money on late payment fees and may be able to keep your account current without any hassles. Remember that your lender can be you on your side when it comes to managing that loan, so ask for help if you need it.
Explore the Idea of Rewriting the Loan Agreement
If you have maintained an account in good standing and have relatively good credit, you may qualify for lower interest rates and a more affordable payment plan. Don’t be afraid to ask for a review of your loan agreement to modify the terms. Some lenders will be able to rewrite your contract so that those car payments become that much more manageable.
Refinance Your Car Loan
Another option is to refinance your loan to reduce your monthly payment and pay lower interest rates. You can refinance your car loan just like you refinance your home loan and it only takes a few minutes to apply. Shop around for the best refinancing deal and review your budget to determine what you can realistically afford. That extra money you save on car payments each month could be used to pay down other debts or simply build up your savings account with ease. Just realize that you do typically need decent to good credit to be able to refinance your auto loan.
Find Ways to Save Money on Car Costs
The cost of maintaining your car may be an added expense that you do have some control over. You could save money by driving your car less frequently and doling out less money for gas, finding cheaper parking options, and reviewing your car insurance policy to make sure you are not paying for insurance coverage you don’t actually need. Consider installing an alarm system to save money on insurance. Shop around for an affordable and reliable mechanic to take care of car emergencies at the right price. Saving money on car-related expenses could help you make those car payments with ease.
Q: My mom will be the principal on a car loan, I will be the co-signer, will this negatively impact my credit?
A: Becoming the co-signer on a new car loan will not hurt your credit score unless you or your mother fail to meet the terms of the car loan and start to miss payments.
Your email indicated that you already have many charge-offs on your credit records.
Therefore, your credit scores are likely to already be very low, which means you will not qualify for a home loan, something else you also asked about.
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