Dear Driving for Dollars,
I’m behind in my car payments and have been making half of the payment each month. What can I do to avoid getting repossessed?
— Steve

Dear Steve,
A vehicle repossession will seriously affect your credit and make it difficult for you to get any type of loan in the future, so call your lender and talk to someone right away. Any lender is more interested in keeping you as a customer than repossessing your car. Explain to your lender why you are having trouble making your payments. If you have any idea when you’ll be back on your feet, be sure to tell him/her. Then see if your lender will work with you to defer your payments, to refinance your loan to a lower interest rate and/or to extend the length of your loan to lower the monthly payment.

Also, ask your lender what you owe on your loan. Then check what you could sell it for in your area by looking at your local newspaper ads or by consulting one of the many used-vehicle pricing Web sites. If you can sell it for more than you owe — and you don’t see your financial situation changing very soon — then you might be best off to sell the car and pay off the loan. You can then buy a cheaper car or use a cheaper, alternative form of public transportation.

Read more Driving for Dollars columns and Bankrate auto stories.

Tara Baukus Mello is a freelance writer who has written about automotive topics of interest to consumers since 1995. If you have a car question, e-mail it to us at Driving for Dollars.

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