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What to do if you can’t make your final car loan payment

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Making your car payment late or skipping it altogether has the same consequences, regardless of whether that car payment is your first or your very last. Not being able to make your vehicle payments can mean repossession. But there are options to hold onto your vehicle and avoid repossession even if it is the final payment.

Options if you can’t afford your final car payment

If you have found yourself struggling to make your final car loan payment you have a few options to avoid long-term credit impacts and the associated costs.

1. Request loan modification

Requesting a loan modification results in exactly what it sounds like, a modified loan. This is different from the process of refinancing your loan. Loan modification is a process done directly with your existing lender in order to change your terms. A typical modification could result in lower interest rates or deferred payments. While this may be more of a challenge far into your loan, reach out to your lender as soon as you can.

2. Trade in your car

To trade in your vehicle you will have to reach out to several dealerships and see if they have a more affordable vehicle available. This process may be easier if you financed your vehicle through a dealership and work with said dealership, but it is still possible if not. But don’t settle for the first offer you get, shop around and know the value of your vehicle when you request quotes.

3. Sell privately

While selling your vehicle with a loan does take some extra consideration, it can alleviate the stress of your current car and allow you to get a more affordable option. The car market is especially strong right now so you will likely get a good price. But selling your vehicle will mean the need for a new car and, with a hot market, it may be challenging to find a vehicle for your specific needs and budget.

4. Ask friends and family for help

The final option is to reach out to friends and family for help. While this help doesn’t need to be financial, it can feel uncomfortable. Use this as a final effort to afford vehicle repossession rather than your first line of defense. Ask those around you if they know anyone interested in purchasing or selling a less pricey vehicle, and work from there.

Car Outline
Refinancing your loan isn’t an option

Unfortunately, if you are at the final payment stage of your loan you are too far to refinance. Lenders hold specific constraints in terms of refinancing on aspects such as vehicle age, mileage and loan amount.[/su_editorial-insight

How to avoid car loan payment issues in the future

Not making your final car payment can be discouraging, but one financial misstep does not need to result in a lifetime of headaches. Instead, take some time to prepare for your next loan to ensure on-time payments.

Budget for your next vehicle purchase

The key to avoiding future financial hardships comes down to only financing a vehicle you can afford. Before signing off on your next auto loan, calculate how the monthly payments fit into your budget — while also factoring in any catastrophic changes to your bank account.

Set up automatic payments

Not all lenders offer an automatic payment option, but most do. And if you have consistent pay, it is a great way to ensure you make your loan payments on time and in full. You may even benefit from a rate discount, which some lenders offer when you sign up for autopay.

Check for loan add-ons

If you’re financing through a dealership, read the fine print on your loan agreement and be sure that you aren’t spending extra money each month on vehicle add-ons. Look out for typical add-ons like extended warranties, tire and wheel protection, rustproofing and GAP insurance.

The bottom line

Struggling to make your final car payment can leave you without your vehicle if you don’t act fast. But there are options. Consider loan modification, trading in your car, selling privately or reaching out to friends and family before accepting vehicle repossession. Stay up to date on available financing rates to ensure you aren’t in this precarious situation with your next set of wheels.

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Written by
Rebecca Betterton
Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car.
Edited by
Auto loans editor