How to Keep Your Car From Being Repossessed

If you know you can't make your next car payment, call your lender immediately. Don't avoid your lender. Many auto loan providers can help distressed borrowers by modifying the loan and providing a cheaper monthly payment. If you contact your lender before your next payment is due, it might also allow you to defer one or more payments, meaning you can skip several payments without penalty. If your lender can't help you, you'll have to refinance your loan with another lender.

Instructions

Working with Your Lender

1. Call your lender. Describe your situation to a lending representative and ask if you can defer one or more car payments. This will bring your loan current if you're past due on payments.

2. Ask your lender if it can modify your loan to lower your monthly payment amount. Provide your credit information if you're asked to complete a credit application.

3. Go over your new monthly payment amount, interest rate and loan term if your lender approves your loan modification. Ensure the new monthly payment amount is affordable. If your lender asks for proof of financial hardship, provide it.

4. Sign your new loan contracts or payment agreement. Keep a copy of any paperwork you sign for future reference.

Refinancing Your Car

1. Call your current lender, ask for your loan pay off amount and write it down. Gather your car's information, such as year, make, model, mileage and identification number, which you can find on an insurance card or title.

2. Determine where you'd like to apply for your refinance. You can find auto loan providers online or locally. Call the lender of your choice to submit a credit application.

3. Give your loan payoff amount and vehicle information to the lending representative. Wait for your approval, which may take up to one week.

4. Discuss your loan's interest rate, term and monthly payment amount. If you're happy with the new loan, make arrangements to sign your contracts. If not, apply to another lender.

5. Sign your loan contracts with your new lender. Your new lender will pay off your previous auto loan.

Tips & Warnings

• If you can't obtain an approval on your own, use a cosigner.

• If you're past due on your loan payments by more than 30 days, you might have to pay your past due payments before obtaining another loan approval.

References

• Edmunds.com; Stay One Step Ahead of the Repo Man; Philip Reed; April 2009
• Federal Trade Commission; Vehicle Repossession: Understanding the Rules of the Road; November 2008