Commercial, Stories
What To Do When You Can't Pay Your Car Payments
According to Finder’s Consumer Sentiment Tracker, around 2.7 million people have car loans in Australia. This amounts to almost 14% of the population as of March 2021.
What happens if you can’t pay your car loan?
Most auto loans are secured against your vehicle as collateral for the lender if you fail to repay the loan. This implies that if you stop making repayments , your lender may repossess your vehicle. However, before repossessing your vehicle, your lender must provide you with a 30-day notice to give you a chance to settle the late payment.
What is the best way to pay off a car loan?
Now that you know what’s at stake if you can’t pay off your car, let’s look at some of the best ways to pay off a car loan, even for those with bad credit scores:- Contact your lender
As soon as you realise that you won’t be able to make car repayments, reach out to your lender and be honest. Lenders are often willing to work with borrowers to find practical solutions, such as changing the due date or altering the payment schedule.
- Ask for a deferral
You might also inquire with your lender about deferring your auto repayment. If accepted, you will be able to skip a short number of repayments without incurring any fines or costs.
When it comes to delaying repayments, each vehicle lender has their own set of restrictions and criteria. Some enable you to postpone your whole payment, while others oblige you to continue paying interest. Some restrict the number of times you may seek a delay, while others prohibit them outright if you are already behind on your repayment obligations.
- Sell or surrender the vehicle
Another option you can consider is either selling your vehicle to someone else or surrendering it willingly to the lender. In both cases, you’re freeing yourself from the financial burden and protecting your credit rating from any negative impacts.
- Refinance your loan
This entails replacing your existing loan with a new one, typically from a different lender. Once you’ve completed the paperwork, your new lender will pay off your old loan and take over ownership of the automobile until you’ve paid it off completely. You may be able to lower your interest rate or monthly payment by refinancing.
We offer bad credit car loans
Finance One offers bad credit car loans, which are perfect for refinancing your car and acquiring more favourable payment terms. Check out our car payment calculator to see how much you can save, or read our blog on how to reduce your car loan repayments.
Benefits of paying off a car loan early
Exploring all your options for making car payments quickly, even if it seems difficult to do, is essential for protecting your credit history and avoiding additional charges. Here are some of the benefits of paying off car loans as early as possible:
- Save on interest rates
Paying off your car loan early will save you money on interest payments in the future. The sooner you can stop shelling out money monthly for your car, the more money you can save or use to pay off other obligations.
- Allows you to be more financially flexible
A car loan is a serious expense that can tie your finances down for a number of years. Once you’re done with your car repayments, you’ll finally be able to enjoy more of your income or focus on resolving other debts.
- You’ll own your car completely
Being done with your car payments means you can enjoy driving a car that’s 100% in your name. And when, at some point, you decide to sell it, you can do so easily without having to notify the bank or lender.
Pay off your car with the help of Finance One
Here at Finance One, we believe in giving people a second chance at finance. Struggling to make car payments shouldn’t automatically mean losing your much-needed car. With our team of compassionate financial experts, we can find the right financial solution for you, even with less-than-stellar credit history. Contact us today if you have any questions or concerns or want to learn more about how Finance One can save your car!
Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
