Losing a job can cause a ton of different problems - including tons of stress. With the loss of income, it can be quite a challenge to keep up with bills such as your auto loan.
There are many different ways you can respond to this - some can be very helpful, but others can completely ruin the credit you built. At Auto Credit Express, we know times are tough and we want to help you through to greener pastures. That's why we gathered a few pointers about how to handle your loan after job loss.
What NOT to Do
There are two choices that many have made as a way to adapt to their new financial circumstance. However, these choices can cause an incredible amount of damage that will be difficult to overcome in the future.
- Stop Paying
Defaulting on your auto loan (or any loan!) is the absolute worst choice you can make. Not only will this continue to ding your credit for every missed payment, but if and when your car is repossessed, your credit will be completely trashed. In the future this will be a major obstacle as lenders and dealers will see it as irresponsible lending behavior on your part.
- Returned Vehicle
Some may feel that taking their car back to the lender or dealer is the better option. This is known as a voluntary repossession and it can be just as damaging as the alternative. There is a better choice!
Deferring Your Loan
You may not believe it with all their rules and regulations, but lenders are people too. They have the capacity to understand your circumstances and empathize. In the recent years there have been thousands of people in the same situation as you. Just go to your lender and talk to them and you'll be surprised that they may already have a solution for you! It's called deferment.
What this means is that the dealer or lender will give you a few months to find a job again without the worry of missing your payments. If they already charged late fees, they may even be able to reverse them. Typically what happens is that the payments you missed while looking for a job will be applied to the end of your loan. However, you can discuss other payment options with your loan officer.
At Auto Credit Express, we worked hard to get you into the car, truck or SUV that you needed even with bad credit. We don't want to see you lose your vehicle or lose your rebuilt credit score. Choose the option that will make you and the lender happy. It's a win-win!