In contemporary life, it is pretty much impossible for you to do without a car. Not only do you need it to commute to your office or business but you may very well need it to conduct your work, if it involves meeting a lot of customers and suppliers. It is thus very important that you should have continuous and uninterrupted access to your car to avoid complications. It is the usual practice to acquire cars either by getting it financed from the dealer or a bank or leasing it for a pre-determined time. In either case, you need to make monthly payments as per the terms of the agreement for a number of years, usually three. Unless, this is done on time and regularly, the car is very likely to be repossessed. Here are some tips on how to ensure that your car never gets repossessed.
Get the Loan Approval First
Most customers typically spend a lot of time choosing the car they would like to buy, and then go about the business of applying for the loan. What really happens is then because they have already made up mind regarding the model, they take on a loan of an amount somewhat beyond their means or at interest rates that are not the best simply in their hurry to get the loan approved and drive away in the new car. If you are careful, have a good idea of the monthly outgo that is practical considering your income and current expenses, you will be more likely to scout around for the best deal for the loan, and then buy a car best suited to the situation. Customers who are overenthusiastic may soon find themselves in quite a spot when trying to make their monthly payments.
Make a Budget
Though it sounds simple, many customers have no idea as to how much they should allocate in their budget for the monthly payment for the car. An easy to remember tip is to keep the aggregate of all your monthly debt repayments to less than half of what your monthly income is. So remember to keep in mind the mortgage payment or the student loan that you may still be paying off. If you have too many debts, including large credit card outstanding then you could be heading for trouble unless you can practice strict financial discipline.
If after taking the loan for the car, you may suddenly find yourself in a financial soup because of an unexpected exigency such as loss of employment, or a medical situation. It is likely that your ability to pay your monthly installments will be impaired. You should not hide from your creditors. It is in your best interest to immediately contact the creditors and request them to defer the payments till such time you have recovered your financial stability. However, you need to be reasonable about the time frame as you do not expect to keep them hanging on forever. If you do this before missing any payment you are likely to find them more responsive to the suggestion of deferment.
Refinance the Vehicle
If you expect the change in your repayment capacity to be more enduring and deferment not likely to be a solution, then you should look around for a loan that is cheaper and can be used to substitute the earlier one. Sometimes, the existing financier may also do this if the interest rates have dipped in the meantime, but in most of the cases you would need to locate a new lender. However, beware that third party refinancing could result in your credit score being affected.
It is very likely that the change in your financial circumstances would have resulted in your defaulting on all your monthly payments, including that of credit cards. If you have been missing payments that all your creditors will be reminding you to become regular once more, and also imposing penalties and late fines that can really mount up in a very short period. If you think that the amount of debt is really huge, and that there is a very real chance of you losing your car and home then you should apply for debt relief.
Depending upon your actual circumstances, it may be possible for a financier to consolidate all your debts, and make it subject to a single monthly payment and also give you a longer time frame to pay the loan off. While this method may be somewhat expensive in the long run, it is a very good way of ensuring that you can make a regular monthly payment.
Author Bio: Henry Mitchell is a senior manager who looks after auto finance at one of the leading car portals. To know more about debt relief you can refer to other articles in this series.