Car Loan Payment: Options for When You Can’t Afford Your Car Payment

Having a car comes with so many convenience and comfort. You don’t have to wait for commercial buses when going for any functions. Shopping becomes even better because you don’t have to be lugging so many groceries on the bus.

Options When You Can't Afford Your Car Loan Payment

However, for those experiencing financial problems, having to pay a car loan can make owning a car seems more like a burden than a convenience. If you don’t think you’ll be able to make your car payment, you do have options that can help you avoid repossession.

Not paying your car loan can affect your credit and maybe even your employment for years to come. So simply ignoring the payment obligation isn’t a valid option. There are, however, other options for you if you find yourself unable to make your payment. Read on.

When You Can’t Afford Your Car Payment

It’s not your fault that; the loan you took on getting that dream car, you are not up to date with payment. Not to worry there is always an option for you. Below are the list of options available for you, when you can’t afford your car loan Payment;

Talk to Your Lender

Your first step if you think you won’t be able to make your payment is to talk to your lender. You’re not the only person who’s ever had financial trouble; whether it be for just one month or a longer-term situation—and lenders have lots of ways to help you.

If you’re not making your payment, they’re not making money, so it’s in your lender’s best interest to make it possible for you to do so. They do this in several ways.

Loan Modification

Sometimes, depending on the lender, you may be able to do a loan modification, which means you and the lender agree on a repayment term change. Usually the object of a modification is to lower the monthly payment, which can help you keep your obligation.

The downside to a modification is that it may raise your interest rate—and that means even though you’re paying less per month, you’ll pay for a longer time. A longer term also means paying more over time.


If your lender is not interested in a modification, they may be amenable to an auto loan refinance. This is when you take out a second loan, with new terms, that pays off the old loan. If you receive a higher interest rate or longer term when refinancing, you’ll likely pay more over time. If you need the help right now in the short term, however, it’s a valid option.



Some lenders offer a one-month deferment, which means they allow you to skip a payment, which they tack on to the end of the loan. If you’re simply having a temporary financial shortage, this could be an option. Just keep in mind that if you do this, your loan term will be a bit longer—and your final payment will be more.

If you do take advantage of this, you’ll want to make that “skipped” payment as soon as possible, in addition to your regularly scheduled payment.

Balance Transfer Credit Card

Another option is to get a balance transfer credit card with a 0% APR balance transfer offer.

While doing this can give you a year to pay down the balance without also paying interest, keep in mind that if you can’t pay it off within the introductory period—usually 12 months—the interest rate will skyrocket back up, possibly to almost 25%. If you’re not careful, you could find yourself in an even worse position.


Home Equity Line of Credit could give you the money you need to get caught up on your loans, consolidate payments, and help you keep your car—all at a lower rate of interest than you may have with your car loan. Since the money comes from your home’s equity, the rates are generally better.

Be aware however, that because your home secures this line of credit, if you find yourself unable to make that payment, you could lose your home.

Trade Your Car in

Trading your vehicle in for something less expensive can also help if you’re unable to make your payments. The object here is to trade it in for another vehicle that is cheaper—and therefore will result in a smaller loan and lower payment.

Allow Someone Else to Assume the Loan

A few lenders allow loan assumption, or someone else taking over the payments on your loan. Most lenders prefer to do a new loan for the new buyer instead of them taking over your loan; but a loan assumption can be done in some cases.

You can also make an agreement with someone who will make the payments to you, and then you turn around and pay the lender. This is a highly risky maneuver, however; if your other party decides not to pay, you are out of the payment and the car.

Sell the Car

Sell the Car

If your car is in decent shape and you owe more on it than its Blue Book value. You may be able to sell the vehicle and use the money to pay off your loan. This is one of the better options—if you can get the full value of your loan in the sale. If not, you’re still on the hook for any remaining payments.


If you’ve gone long enough without making payments, your lender will send someone to physically take your vehicle back on behalf of the lender, who then sells or auctions off your car. Any costs gained in the sale or auction are applied to your loan. If possible, don’t ever allow your car loan to get to that point.

Voluntary Repossession

This is mostly the same, except in a voluntary repo, you’re turning over your vehicle to the lender of your own accord. If you’re late on several payments, you may want to consider this option because it will save you the additional costs involved if the lender repossesses your vehicle.

The best time to start looking at options is before your payment is late. If you even think you’ll have a problem making your payment, talk to your lender first. Have a plan in place for if you experience financial difficulties, and make sure you’re aware of all your options.

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