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Can't Make Your Car Payment? Your Guide On What To Do

Finance | 05/27/2023 19:27
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The economy is in a rough spot right now, which means many of us are behind on payments. Mortgage, rent, insurance, groceries, electric bills–it seems like we can never get a break or catch up. Car loan debt is at an all time high right now due to high car prices and high car loan interest rates. In fact 2 in every 13 Americans is paying over $1000 on their monthly car payment. It’s not hard to imagine these numbers getting the best of us and resulting in a missed car payment. But what exactly happens when we actually can’t afford to make our monthly car payment?

Here’s what you should do if you can’t make your car payment.

What happens if you miss a car payment?

 

The exact consequences of missing a car payment will vary depending on your contract and your lender. But missing a car payment will definitely affect your credit score, which will have lasting implications for your financial future. A bad credit score can mean the following:

  • You will have a harder time getting approved for loans and will have fewer options.

  • You will have higher interest rates.

  • You will have higher insurance premiums.

  • You may have to pay a deposit for utilities.

  • You may have a tougher time renting an apartment.

 

A hit to your credit score can take years to recover from and could affect several areas of your life.

 

It is unlikely that your car will be repossessed if you miss one car payment, but some companies will repossess your car if you miss two payments. Most companies will repossess your car by the third missed payment. 

 

If your car is repossessed you may think that is the end of it, but the lender may actually come after you with legal action to incur any fees that you haven't paid. So not only will you be out of a car (and without the down payment and payments that you have already made), but you may owe the lender even more money, and your credit score will be seriously compromised. A repossession will show up on your credit report as well, which will be a major red flag for future lenders.

 

All of this is to say: you do not want to miss a car loan payment if you can help it. The repercussions are long lasting and will take a long time to recover from.

 

If you are struggling to make one payment, chances are you will struggle again. It’s better to be proactive and address your financial situation before you miss a payment and certainly before you miss several payments.

How many days late can you be on a car payment?

 

This varies from loan to loan but most lenders will give you a 10 or 15 day grace period if you miss a payment. As long as you pay your bill within a few days of the due date there will not be consequences. Some lenders will give a greater grace period on your first payment with a 60-day no payment option. This means that you will have 60 days after signing to make your first payment. This can be very helpful if you made a large down payment and could use a month to catch up.

 

Your contract will list if you are responsible for any late fees. The amount will vary from lender to lender but will typically be between 2-5% of your monthly payment. 

Can you defer a car payment? How many times can you defer a car payment?

This is another thing that will vary from lender to lender. Some lenders will allow you to defer once, while others may allow you to defer payments three or four times. The timespan of these deferrals may be per year or per the life of the car loan. Read your contract carefully to determine what the implications are.

Can I make a partial payment on a car loan?

You may think that if you make a partial payment it will help to mitigate the damage. While making a partial payment will apply towards your loan and reduce the amount you owe, if you do not make the payment in full it will still be marked as late. This means that it will still negatively impact your credit score and may put you in jeopardy of losing your car depending on how your car loan contract is worded.

Should you defer a car payment?

 

Deferring a car payment is a good option if you are starting to struggle financially but feel that a small break can help you catch up. There are several advantages to deferring a car payment:

  • You can avoid late fees.

  • You can avoid the risk of repossession.

  • You can use the extra time to decide what to do to fix your financial situation.

 

But deferring a car payment comes with some disadvantages as well. After all you will still be responsible for making the payment and for the interest accrued during that time. If money is truly tight, deferring the payment may just mean deferring the problem.

What options do you have if you can't make your car payment?

 

Talk to your lender.

A great first step to take is to contact your lender directly. They may suggest deferment or they may be able to enroll you in a program to help you make your payments. If you have a good history of on time payments they may be more willing to work with you. Remember, your lender doesn’t want to repossess your car–that’s a lot of work on their end to recoup your payment. They ultimately want you to pay them, so they may be more willing to help you out than you may anticipate.

 

When you talk to your lender you can also ask them if it's possible to change your payment date. If you get paid at the beginning of the month and your loan is due at the end of the month it may be harder for you to make your payments on time. But if your lender allows you to change your payment date it may set you up for more success.

 

Refinance your loan.

If your lender is not willing to work with you or you do not have a good relationship with them, you may want to refinance your car loan with a new lender. There are a lot of benefits to refinancing your car. You can not only secure a better car loan APR, but you can change your repayment terms which can give you a lot of extra breathing room every month. Lengthening your repayment period means that you will pay off your loan over a longer period of time. You will end up paying more money in the long run because you will pay interest for longer, but this will mean much lower payments every month. If you are in danger of missing payments, this might be your best option. Companies that specialize in auto refinancing can help you secure a refinance loan that will work for you and help you navigate the refinancing process.

 

Get rid of your car.

If you are struggling, ask yourself “do I really need a car?” Let’s face it: cars are expensive. Not only do you have car payments, but you have to pay for insurance, gas, maintenance, parking, tolls, registration, and more. If you live in an area that has public transportation or you have someone in your life who can help you get around, it might make more sense to get rid of your car altogether. This will alleviate a lot of stress in your life. Selling your car will also give you a little cash injection depending on how far along you are in your loan.

 

Trade in your car.

If you still need a car to get around, selling your car is probably not a great option. But you can trade your car in at the dealership to get a car that has more affordable payments. If you have the time and inclination you can sell your car privately and use the income to secure a less expensive car. You will get more money if you sell your car privately, typically making 15%-25% more than if you were to trade it in. 

That’s what you can do if you are having trouble making your car payment.

 

The best way to ensure that you can always make your car payments is to select a car that you know you can afford. Determining a budget ahead of time and getting preapproved for a car loan will help you to stay within a healthy range of car prices. Try to avoid the unnecessary add ons and be sure to make a healthy down payment to further secure an affordable monthly payment.

 

If your monthly payment is too much, contact Auto Approve today to see how much money we can save you!

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More Resources

Top 4 Ways to Get a Lower Monthly Car Payment in 2025

How can you get a lower monthly car payment?When money is tight, or you're hoping to make a big purchase, every penny counts. Whether you're trying to save up for something big, looking to put more money where it matters, or cutting back in leaner times, lowering your expenses can help.That means, when you're going through your budget, you may want to figure out where you can save a few dollars. For many people, a car payment is one of the bigger bills they pay each month. If that's the case for you, lowering your car payment could be the answer to your financial challenges.Whether you need a temporary fix or a long term solution, there are tons of great options out there to help you secure a lower monthly car payment.Here are the four best ways to get a lower monthly car payment1. Talk to your lenderLenders are in the business of making money, and they only make money when you make your payments. You may be surprised to learn that many lenders are willing to work with borrowers to help them manage their payments more effectively.They may allow you to skip a payment or lower your payments temporarily. Keep in mind that interest will still accrue during this time, but it is always better to defer and have this accumulate than to have missed payments. Missed payments can trigger late fees and hurt your credit score. You want to avoid the negative credit impacts that will occur without deferment.That said, not all lenders are magnanimous, and they'll rarely want to cut a deal that doesn't benefit them in the end, so while you may be able to skip a payment or lower your monthly cost, you may end up paying more interest in the long run if you go this route.2. Refinance your carRefinancing can lower your monthly car payments in a number of ways and is likely to be your best option to effectively and sustainably reduce your monthly payments. Since refinancing benefits both you and your new lender, it's a win-win – they don't need to make more money than your current lender, so you're more likely to get a deal that'll cost you less overall. Here's how.You can get a lower interest rateOne of the main benefits of refinancing is securing a lower APR. There are several reasons you might be able to get a better interest rate this time around.You didn’t get a good deal on your original loan. If you went in to look for a car and got talked into dealership financing, there's a good chance you got stuck with a higher-than-necessary APR. In this case, refinancing is likely to lower your APR significantly and cut your payments drastically.Interest rates have dropped. Interest rates fluctuate based on how the economy is performing. If you bought your car while rates were high, there’s a good chance you are eligible for a lower APR if you refinance.Your credit score has improved. If your credit has improved since you first bought your car, you are probably eligible for a much lower rate. Your credit score is the most important portion of your application, and an improvement in credit can yield a drastically better interest rate.You can lengthen your repayment periodEven if you are not eligible for a lower interest rate, refinancing can still reduce your monthly payments by changing your repayment schedule. If you lengthen your repayment period (for example, from 36 months to 48 months) your balance will be paid over a longer period of time and your payments will be lower. Keep in mind you will be paying more interest overall, as you will pay interest for 48 months instead of 36 months, but it will drastically reduce your monthly payments.You can add a co-borrowerWhen you refinance, you can add a co-signer to your loan and possibly reduce your interest rate and secure better terms. If your co-borrower has good credit, they will be eligible for a better interest rate. If refinancing sounds like a good option for you, Auto Approve can streamline this process and help you start saving money today. We work as your advocates to get you the best rates possible, then do the paperwork for you..Want to know more about Auto Approve? Click here to find out why Auto Approve is the best way to refinance your auto loan.3. Sell Your CarIf you need a more permanent solution than talking with your lender will provide, and refinancing isn’t an option, you might need to consider a new set of wheels. You can either trade in your car to a dealership or sell the car on your own.Almost all dealerships will accept trade-ins and can put you in a car that will have lower monthly payments. Make sure you talk to the dealership and are upfront about what you can and cannot afford. You can also choose to sell the car privately. This is a bit more work than going to a dealership, but you will probably get more money for your car. If you want to sell your car on your own, be sure to clean your car very well, get good pictures, and make sure maintenance records are up to date. You want to make your car as attractive as possible to increase the amount of money you can make.Whether you sell to a dealership or to a private buyer, be sure to know three things before starting this process:How much you owe. Know how much money is left on your loan balance, and how much you need to sell the car for in order to break even.How much your car is worth. Go to Kelley Blue Book or Edmunds to look up the value of your car. It might be worth more than you think and you don’t want to lose out on money that could be yours.What you’ll do for transportation next. If you plan to replace your current vehicle with a less expensive one, make sure you take time to look at the market and find vehicle options that’ll fit your needs before giving up your car. Vehicle prices have fluctuated drastically over the past 5-10 years and are likely to shift again with changing car tariffs. If you won’t be replacing your vehicle, have a backup plan for how you’ll get around and test it out for a week before making the change.4. Lease a Car InsteadIf you have sold your car but still need to get around, getting a lease instead of purchasing a new car might be a good option. Leases are generally cheaper than buying a new car, as you are only paying for the depreciation that accrues during your use. There are three main leases you can pursue:New Car Lease – This is the most common type of lease and is widely available. You typically need pretty good credit and a down payment to secure a new car lease.Used Car Lease – These are not as common as new leases but they are out there if you do your research. The APR might be a bit higher, but since the car is not worth as much you might have lower payments than if you got a new car lease.Lease Takeover – This occurs when someone wants to get out of their existing lease for one reason or another. Websites like LeaseTrader.com and SwapALease.com provide a space for you to shop around for a lease takeover. Some people who are desperate to get out of their existing leases may even offer cash incentives, making this a good option if money is particularly tight. You will still need to go through an application and credit check, but you can probably secure a nicer car for a lower rate than if you were to get a new car lease.And those are our top tips for lowering your monthly car payment!In times of economic uncertainty, budgeting and saving money is incredibly important. If you are struggling to make ends meet every month, consider one of the options above.And if refinancing seems like the right option for you, or you want to find out just how much refinancing could lower your monthly payment, Auto Approve is here for you. All it takes is a few clicks and to get a quote and get on your way to more money in your pocket and less on your vehicle payments.GET A QUOTE IN 60 SECONDS

Vehicle Safety in A Heat Wave

Do you know how to drive safely in a heat wave?The dog days of summer are arriving across the United States, and as it gets hotter, our vehicles do too. Just like driving in wintry conditions, driving in extreme heat poses its own unique set of challenges. From dead batteries to tire blowouts to soft tarmac, there’s a lot to be on the lookout for when the thermometer hits a record high.That’s why now is a good time to refresh your knowledge of when you need to worry about car safety in high temperatures, what to look out for, and how to keep yourself safe.Let’s start with the basics.FAQs: Summer Car SafetyTo lay a little groundwork and make sure we're all on the same page, let’s take a look at these frequently asked questions about driving in inclement heat.Is it safe to drive in a heat wave?Yes, broadly it is safe to get on the road in a heat wave, as long as you are prepared and understand the risks. We’ll dive into the details in the next section, but you should: avoid long drivesplan to stop frequentlyhave an emergency kit in your car in case anything goes wrong, and keep a close eye on your engine temperatureHowever, if you follow all the tips in the guide, there is no reason you can’t drive in hot weather by exercising caution and good sense.What temperature is too hot to drive a car?There is no single temperature at which it becomes definitively unsafe to turn on a car, but avoiding driving in unusually high heat is generally good practice, if you have the option. The outside temperature is less important than your engine temperature and the temperature inside your car. If your engine reaches over 220° F, the various fluids that allow your car to run could start burning up – this is where things start to get dangerous. Similarly, the human body needs certain conditions to function properly. Depending on the humidity, temperatures can become dangerous between 95 and 130° F – but you don’t want to risk being at the top of what your body can handle for any length of time. That means, if your car doesn’t have good cooling or if it’s hot enough that you can’t use the AC because your engine is in trouble, you want to avoid being in the car for any length of time. Instead, try to drive early or late in the day when temperatures are lower and keep your car cool.How do you protect your car in 100 degree weather?The best things you can do are park in the shade (or out of the sun), use a sunshade to keep the sun from heating up your car’s interior (or consider getting a car cover if you live somewhere likely to get many days of extreme heat and don’t have a garage at home), and make sure you get your car fully checked over ahead of extreme heat weather to ensure you have enough coolant and fluids, your tire pressure isn’t too high or low, your air conditioner is running smoothly, and your battery’s in good shape. A fresh wax and an oil change can also help protect your vehicle from deteriorating due to extreme heat.Want a little extra wiggle room in your budget for heat-proofing your vehicle?Put more money back in your wallet by refinancing your vehicle. Most people are eligible for a lower rate than they’re paying. That means paying less monthly and over the life of your loan.With Auto Approve, you can get a quote in just a few minutes, no commitment required. And if you like what you see, we do the paperwork for you.Get a free quote to see how much you could save.Safety Tips For Driving in a Heat WaveLet’s get into the nitty-gritty of car safety in extreme heat. When driving in very hot temperatures, you should…1. Keep an Eye on Your Vehicle’s Fluids, Engine Heat & Tire PressureThe most dangerous thing that can happen when temperatures get too high is your vehicle overheating – your battery, tires, and engine are at highest risk of this, and anything with a fluid can have issues if your vehicle’s systems get too hot.In an emergency situation, especially if you see steam or smoke coming out of any part of the vehicle, pull over right away.If you’re concerned or if your vehicle’s engine heat warning light comes on, turn your heat on until you can find a place to pull over. It might feel counterintuitive, but will pull heat away from your engine.You can and should have your vehicle checked ahead of the hottest part of the summer to ensure all the systems and fluids are in top working order to avoid any issues.Avoiding long drives in the hottest part of the day can also help you keep any part of your car from reaching dangerous temperatures. Ideally, you don’t want to drive more than two hours at a time on days with extreme heat. Think of it like driving in a snowstorm – just because it’s not visibly coming down on you, it’s no less dangerous to be on the road in high heat.2. Carry Water & Emergency SuppliesAn emergency kit is a must for every car, and having one tailored to the heat for summer is essential in a heat wave. There are pre-made kits for heat exhaustion and high temperatures, or you can put together your own.Your kit should always, year-round, include car safety kit essentials like:Jumper cablesTire repair & replacement kitSpare tireFirst aid kitPaper mapLight, non-perishable snacks and drinksFlares or reflective triangles Spare phone chargerIn the summer, you want to think about the unique challenges of a hot sunny day and add items to help prepare for that, like:SunscreenHatBug sprayLightweight blankets or other materials to protect you from the sunReflective sunshade for your windshieldMisting fan, cooling towels, cold compress, or cooling patchesA thermometer in case of heat exhaustionAlways, always, pack lots of water and electrolyte fluids or powders to avoid dehydration.And remember – never leave a pet or child alone in a hot car.3. Park SmartA simple but effective way to keep yourself and your car at a reasonable temperature is to avoid parking in the sun. Take any chance you can to park in the shade, in a garage, or in a covered parking lot – when you start with a lower car temperature, it’s easier to maintain.We’ve mentioned a sunshade a couple times in this guide, but here’s one more plug to pick one up – they can be an effective way to keep the interior of your car cool, and there are relatively inexpensive universal and model-specific models that fold up neatly into the back of your car. Car covers can be more of a hassle to get on and off, but can be a big help if you don’t have a better parking option and will regularly need to park your vehicle in the sun during hot days.4. Avoid The Hottest Parts of the DayIf you must drive during a heat wave, driving in the morning or evening when the air is a few degrees cooler is a smart move. Try not to run errands at high noon if they’re something you could do at night instead. And, again, if you must be on the road in the heat, make the trips short and stop frequently. Plan smart. Summer’s not the best time to take a road trip through the Mojave desert (but a great time for a road trip up the Northeast coast!). 5. Keep An Eye on The RoadOne final danger to think about is the road during very high heat days. When temperatures rise, tarmac can soften, potholes can open up, and other drivers can be more prone to overheating and vehicular issues. Make sure that, even on familiar roads, you’re paying attention to the terrain and the cars around you to keep yourself safe.As the driver of your vehicle, you are an essential part of everything working correctly. Being too hot or dehydrated can lead to confusion, illness, and exhaustion, so make sure you take care of yourself as well as the car.Now You Know How To Take Care of Your Car In SummerExtreme heat has become a staple of summers in the US. Make sure you’re ready for anything the next time a heat wave hits.Remember these key points:Use every tool you can to keep your car cool when you’re not drivingAvoid the hottest part of the day and long driving stintsCarry emergency supplies, and especially waterGet your vehicle fully checked to avoid the worstPull over as soon as possible if you see steam, smoke, or an engine heat warning lightRemember that heat affects the road and other drivers as well as you and your vehicleTake care of yourself and avoid unnecessary risksFollow these tips to keep your vehicle in tip top shape on even the hottest days and you should be able to drive smart and safe all summer long.And one more tip? Refinance with Auto Approve and save on your monthly auto loan payment!Summer means high heat, but it also means vacation and fun in the sun. Refinance to put more of your money back in your wallet for the things that matter most to you.Thanks to dealership markups, most people are paying a higher rate than they need to be on their vehicle loan. Refinancing can help you secure the best rate you’re eligible for. When you get a free quote from Auto Approve, one of our representatives will work with you to find the deal that makes the most sense for you – then do the paperwork for you, making refinancing simple.Get your free quote now.

Smart Money Moves to Make When You Have A Little Extra Cash In Your Pocket

“What can I do with $500?”It’s one of the internet’s most-asked personal finance questions. Well, here at Auto Approve, we’re always saving people money. After all, refinancing your auto loan can save you anywhere from a few hundred to several thousand dollars over the life of the loan! That means we’ve had some time to think about what your next step should be.Whether you have a few hundred or a few thousand dollars back in your pocket, here are 5 smart things to do when you have more money back in your wallet!The Best Thing to Do When You Have Surprise CashAlways speak to an advisor about your unique financial situation before making any big moves. Everyone’s personal finance journey is unique, so these may not all apply to you. Hopefully you can find an idea for your money (or a combination of these suggestions!) that sounds just right.1. Put it in savingsA simple, elegant solution for any windfall, putting your money in savings – especially a high yield savings account, if you have the option – is a great way to set up your future self for success. Savings are important for so many reasons, from lowering financial stress to ensuring you have future freedom.Most Americans aren’t hitting savings recommended targets for emergency funds and retirement. While this bit of extra cash in your wallet might not feel like enough to get you there, any amount is a good start!Ideally, money you save should start to grow with interest so you can keep earning a little extra pocket change on autopilot. Many high yield savings accounts have no minimum balance, so you can even start earning a few percent on just $500 – although the more you can add to the account to grow it, the better.2. Pay down debtDepending on your overall financial situation, you may want to use any extra cash to knock off some debt. If you have debt with a relatively high interest rate – like credit card debt – paying off even a portion of the balance will save you from paying more interest than you need to in the long run.Having less debt has financial and psychological benefits! It can reduce stress as well as expenses. Plus, reducing your credit utilization ratio and debt-to-income ratio can raise your credit score and make you more eligible for future loans should you want to make a big purchase down the line.And if you have a larger chunk of debt, it might be worth consolidating your debt while you’re at it. Consolidating your debt means bringing all your debt together under one umbrella (or fewer umbrellas, at least, depending on the nature of your debt). It can help you get more favorable terms and simplify the money management and payment process.Use the extra cash toward your first payment(s) and take time to figure out how you can build a budget and make changes in your spending to avoid future issues.3. Put it in an index fundConsider growing your money by putting it in an index fund.An index fund lets your money rise (and fall) with the stock market. If you can handle a little risk and won’t need the money in the immediate future, putting it in an index fund is a good way to enter the stock market for the first time and to ensure you have money at least matching the rate of inflation. That means your $500 today will be worth the equivalent of $500 several decades from now – or, ideally, more. After all, historically speaking, the stock market has always trended upwards in the long run, so even when things are down, the best advice is usually just to hang on and it’ll work itself out. This is especially true of index funds that don’t rely heavily on one company’s success or failure but rather act as a picture of the market overall.Wondering where to get some extra cash to get started? Consider refinancing! Refinancing allows you to get the best rate you’re eligible for and to change the term of the loan, meaning you can pay less per month and pay less interest overall. Most people who got their auto loan from a dealer can save money thanks to marked up dealership rates!Get a free quote to see how much you could save.4. Start a side hustleIf you want to grow your extra cash into more extra cash, why not use it to start a side hustle? Whether there’s something you love to do or something you’re good at that might be in demand, a little investment can go a long way to get you started. Popular side hustles include things like cottage baking, photography, design, selling things from your garden, or skills learned for work like accounting, personal assistant work, coaching, and so on.If you want to get started with a side job, some things you might consider spending the extra money on could include:EquipmentSoftwareIngredients or materialsA websiteA small standMarketingCourses to build your skillsCertifications to make yourself more marketable5. Spend it on someone or something you loveSo you have a little extra money in your pocket. If you’re in good financial shape otherwise, you can use it as an excuse to treat yourself, your friends, your partner, or your family!Experiences and fun aren’t without inherent value. A great meal might inspire you to cook differently at home. Guitar lessons might feed your soul. A vacation could expand your horizons and help you feel refreshed. And fun is important just for the sake of fun! Even with just a few hundred dollars, you could plan a road trip or find ways to add more excitement and joy to your year.And those are 5 great ways to make the most of $500 (or more!)Which option is right for you and your money? Only you can say. But hopefully, these ideas have given you a jumping off point to get started making your extra cash go further.Put more money in your pocket with Auto Approve.Is refinancing right for you? Find out how much you could save in just a few minutes! Tell us a bit about your vehicle and current loan to see your refinancing options – no commitment or hard credit check required unless you decide to move forward with refinancing! When you get a free quote, an Auto Approve representative will work with you to find the right option for you, then do the paperwork for you when you find a loan that’s right for you.Get your free quote now.
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*APR and Fees Disclosure: Auto Approve works to find you the best Annual Percentage Rate (APR), which is based on factors like your credit history, vehicle and desired payment terms. Fees to complete your loan refinance vary by state and lender; they generally include admin fees, doc fees, DMV and title. Advertised 5.49% APR based on: 2019 model year or newer vehicle, 730 minimum FICO credit score, and loan term up to 72 months. All loans subject to credit and lender approval.
Auto Approve has an A+ rating with the BBB and is located at 5775 Wayzata Blvd, Suite 700 #3327 St. Louis Park, MN 55416-1233. Auto Approve works to find its customers the best terms and APR, which are based on factors like credit history, vehicle, and desired payment terms. Loan amounts, costs, and fees vary by state and lender; they generally include admin fees, doc fees, DMV, and title fees, depending on the lender and period of repayment. There is no fee to obtain a quote and all refinancing-related costs are included in the amount financed so there are no out-of-pocket costs! For more information, please go to AutoApprove.com.