When times get tough, it can be difficult to afford the things that are an important part of daily routines, such as a car loan. What happens if you need your vehicle, but can’t afford the loan payments due to unforeseen events, such as the coronavirus? Let’s take a look at a few options that could help as you steady yourself in a changing financial situation in Seattle.
Don’t Default on Your Car Loan!
The worst thing you can do if you find yourself unable to continue making your auto loan payment is nothing. Allowing the loan to default not only leaves you without a car due to repossession, it mars your credit for up to seven years. Before you let your loan go, contact your lender.
In trying times, lenders are often willing to help you out when they can. Lenders can sometimes defer, or push back, payments so that you have a chance to catch up if you find you’re unable to temporarily make them. Some lenders may even be able to move your payment due date to help keep you from defaulting.
Captive lenders, who work exclusively through their automakers – Hyundai Motor Finance or Ford Motor Credit, for example – sometimes roll out special programs in trying times that offer their current customers payment relief. This isn’t always available from all lenders, but you never know until you talk to yours.
Check Into Refinancing Your Auto Loan
Another option in the Emerald City that you may have available to you is refinancing your existing auto loan. Refinancing means replacing your current car loan with a new one with different terms.
This option can lower your monthly payment by either reducing your interest rate or extending your loan term. Refinancing is typically reserved for people with either a good or an improved credit score, but there may be options available with some lenders if you meet their qualifications.
Getting a More Affordable Vehicle
When you’re unable to get assistance from your current lender, and refinancing isn’t in the cards, you still have a few options to consider if you need an affordable, reliable car in Seattle. One you may be able to take advantage of is trading in your vehicle for one with a lower monthly payment.
If you can’t afford your current car, trading it in for a more affordable, reliable vehicle could help. If there’s equity (your car is worth more than you owe on your loan), you should be able to use it as all or part of a down payment on another vehicle.
This route can take several turns, and how you handle it depends solely on your individual situation. When you trade in your current car, it’s best if there’s equity involved, meaning you’re not upside down on your loan or have negative equity.
Negative equity, which means you owe more on your loan than your vehicle is worth, won’t always stop you from trading in your car. However, if you’re worried about falling behind, trading in a vehicle with negative equity isn’t the solution. This often means coming up with the difference in cash, or rolling over the negative equity into the new loan – neither of which helps if you’re in a financial bind.
Saving Money on a Car in Seattle
When it comes to trading in your car, you may not know all the options you have. If you’re a Seattleite in a financial bind, you may worry you have to trade in your brand new vehicle for an embarrassing clunker – and that’s just not the case.
In fact, there are many options that could mean a more affordable ride:
- Buy a cheaper new vehicle – If you’re in a position to do this credit-wise, you can trade in an expensive car for a more affordable new model. Plenty of brands have quality vehicles at affordable prices that may not break the bank. Think Hyundai, Kia, Toyota, and Chevrolet; these automakers still sell models at the lower end of the new car pricing scale.
- Buy a certified pre-owned car – Your trade-in equity could go a long way when you opt for a certified pre-owned (CPO) vehicle. CPO cars are typically only a few years old, many just coming off lease. These cars are inspected and refurbished by manufacturer-certified technicians, and come with some form of warranty. CPO vehicles also offer many of the same safety and technology features you find in new cars, but without the high price on the window sticker.
- Buy a used vehicle – If you have to sacrifice your current car for a used model due to affordability, there are plenty of well-cared-for models on the market. The key to finding a reliable used vehicle is to have a certified mechanic and body specialist thoroughly look it over. A mechanic can spot possible issues under the hood and throughout the car that you may not even know enough to look for.
- Look into leasing – Not everyone can qualify for leasing, especially with credit challenges, but it’s not impossible. Leasing can be a good option for Seattleites who qualify, because lease payments are typically lower than loan payments. This is due to the fact that you’re only paying for a portion of the vehicle in a lease, and often for a shorter time – usually just two or three years.
Let Us Help
If you’re in a financial position that’s become difficult due to circumstances you can’t control, remember that there may be ways you can get out of a bind. If one of the steps includes getting a more affordable car, Auto Credit Express wants to help, especially if you’re struggling with poor credit.
We work with a large network of special finance dealerships all across Seattle and the nation, and we want to help you get matched to a dealer for your next vehicle. To get the process started, simply fill out our easy, fast, and free auto loan request form, and we’ll get to work!