It seems like just a few weeks ago the world was a very different place. In fact, COVID-19 has been circulating the world now for nearly 10 months. There is little doubt many people’s lives have changed dramatically. Despite efforts by the government the unemployment rate is rising slowly.
But, even those lucky enough to still have jobs may have found their hours and earnings have been reduced.
That means if you have an auto loan or any other type of finance, you’ll be worrying about how to afford the loan repayment during the current pandemic.
Fortunately, there are things that can be done to help!
Check Your Finances
The first thing you should do is to check your finances and eliminate unnecessary expenditures. This may mean cutting the cable bill or looking for cheap car insurance. Every saving can help you to have more funds available for your auto loan.
Do a new budget and you may be surprised, you may be better off than you think.
Contact Your Lender
Whether you’ve got a personal loan or specific car finance, the next thing you need to do is contact your lender and tell them you’re having financial difficulties due to COVID-19.
Your lender may be much more sympathetic than you think. In fact, many auto loan providers are extending the payment periods, effectively reducing monthly payments but extending the term of the loan.
Others are freezing interest, waiving overdue fees, or creating personalized flexible payment arrangements. In some cases, if you’re in the right financial position, they will accept a smaller one-off amount to settle the loan, making the vehicle yours and reducing the stress of having to find the payment every month.
Many lenders are signed up to the COVID-19 deferral scheme. This means your payments will be deferred until you can afford them again. It allows you to keep the vehicle without damaging your credit and settle the balance in the future.
Sell The Car
It’s not necessarily a great market to sell a vehicle. But, if you have a personal auto loan that is not secured on the vehicle you will be within your rights to sell the car. You can then use the proceeds to settle your outstanding loan and hopefully purchase a cheap car, eliminating the issue for now.
It is important you verify that you are legally allowed to sell the car first!
It’s impossible to say what your auto loan provider will do as everyone’s situation is different. However, most lenders are being very supportive during this difficult time and will work with you to find a suitable solution.
In short, your first step needs to be establishing your finances to confirm what you have available. Then, talk to your auto loan provider and prepare to be surprised.
Of course, loan deferrals and reduced payments still mean you have to pay the full amount of the loan. You may even need to pay more interest. It’s important to consider this when making your final decision regarding the best route for you.