Missing your car mortgage isn’t ideal, but it’s something you might confront if you’ve been affected financially by the pandemic. Falling behind on bills, including car expenses, is something you cannot avoid if you’ve lost your job position, your company has reduced your hours, or you’ve experienced your second job income dry up. If you’re looking for car payment relief because you might be in danger of missing a payment during the pandemic or you can’t pay your bills, you do have some options.
Here’s more information on what to do when you can’t handle payment during the pandemic.
Start With a Budget Review
It’s always useful to know where you stand with your budget amid the COVID-19 pandemic. That said, look at your income and expenses to see if there’s a chance to continue making your car payment during the pandemic.
Income isn’t constrained to a monthly paycheck, either. If you’re getting unemployment benefits or you’re doing side jobs, every cent adds.
As for spending, you may need to cut certain things out of your budget already. For instance, you might be spending less on gas if you’re working from home. But watch closely and see what else you can eliminate to free up capital that you can apply to your car payment.
Reach Out to Your Auto Loan Servicer
If you can’t make a car payment this month, or perhaps for the next few months, you will need to contact a servicer or a lender that owns your auto loan.
You can explain to your lender that you’re currently experiencing a financial difficulty related to the COVID-19 outbreak, and it’s affecting your ability to pay bills. In this scenario, you should be prepared to handle proper documentation proving your difficulty, such as an end report from your employer.
This step can be a little daunting, but it’s not one you should overlook. The thing is that auto lenders don’t necessarily want you to fail to pay, and they don’t want to repossess your car either.
Your lender may offer you different car payment relief types when you can’t make your monthly payment during the pandemic. For instance, those options can include:
● Skip your payment
This program will allow you to make your monthly auto payment when you can’t pay. Normally, the skipped payment is included at the end of the loan term.
This, in turn, can be a smart way to pay for your car if you need brief relief because you can’t make the payment for one month. Jumping over your payment can also help you skip having a late payment show up on your credit card history, which can damage your credit history, which can harm your credit score.
● Car payment forbearance
With a car payment forbearance, you can put off making the car payment for more than one month. For instance, your auto loan service may allow you to pause car payment for at least 60, 90, or 120 days.
During a forbearance time, you’re not responsible for making payment. What’s more, the process is also similar to the forbearance options for mortgages and student loans, available under the CARES Act.
However, the fees and interest may still accrue for a car loan that’s in forbearance. What does that mean? While you can get a break for looking to other alternatives like selling your car and making announcements for your old SUV for sale, you may get a higher surplus to compensate once forbearance comes to an end.
● Auto loan refinancing
Still owing a decent amount of money on your car loan. Then your lender might suggest you refinance your car at a lower rate. Cutting down your loan’s interest rate can bring down your monthly expenses, making it more manageable to keep with the bills.
The key here is to look around for the best rates possible. But keep in mind that refinancing your auto loan may only be a temporary solution if you’re still experiencing hardships in paying your car loan.
Can I Defer a Car Insurance Payment?
Aside from putting your car payment on hold, you may as well be questioning whether you can defer your auto insurance payment if your budget has taken a hit due to COVID-19.
The quick answer is: It depends on your insurance company. Missing your payment means that your coverage can slip, leading to financial issues if you’re in an accident.
As an alternative, many insurers are choosing to offer biased refunds for a premium paid. This is intended to make up for the fact that many people are not using their cars as much due to stay at home order. With that said, drivers simply are not getting the most out of their insurance coverage during the pandemic.
However, there is still an option to reduce your car insurance payment during the pandemic: You could choose to expand your deductible. This, in turn, can reduce your premium. But while you’re dealing with it, you can also look into any discount’s opportunities, such as lower prices for bundling insurance products or safe driver discounts.
Be Proactive to Protect Your Finance and Credit
The COVID-10 has taken a toll on many people’s bank accounts, yet we can still put up a strong line of defense. For instance, you can develop a financial plan to help you tackle your bill and avoid major credit damage.
You can also follow the steps in this article to help you make your auto payment during the pandemic. But the most important thing is to stay in touch with your lender and creditors, so you understand your option for talking about your bills during the pandemic. So, until you make it in one piece, look for financial relief but be aware that attempts may be made to convince you into a new auto dealer, with no payment for more than six months.
Not having to deal with payment until Christmas could look very attractive right, but what matters is how you get rid of this burden.