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Having Trouble Making Auto Loan Payments After Losing Job
Q: I recently purchased a car and now lost one of my jobs. My car is financed and I’m having a huge problem maintaining the payments. I have never missed a payment or been late but it’s getting very difficult every month. Please advise me on my options. Although I need a car I would be ok at this point with purchasing a used car. My payment is $450 a month. My interest is very high, like 19%. It’s a Hyundai Tiburon 2008 and I didn’t put a down payment. I traded in my last vehicle, which was a 2006 Elantra, a year ago.
Jessica D. – Brooklyn, NY
A: Start by contacting your lender to explain your situation to them. They may refer you back to your selling dealer to see about your options in downgrading to a vehicle that fits your new budget. Additional cash down from savings may be the ticket to lowering your auto expense and acquiring another vehicle.
Also, if the job that you lost was the main basis in your loan approval, they may assist you with a plan that will defer your entire monthly payments or a plan that pays for the interest accrual only of your loan. This could greatly reduce your monthly expenses temporarily. In either case, this may allow you enough time to improve your financial situation.
Ask the lender to post your vehicle information on their bulletin boards where employees and other customers may get interested in buying it. Craigslist, eBay or your local newspaper may be great options to sell your vehicle. If you do sell it, be willing to pay any dollar amount short of your loan payoff. Save your credit by staying in contact with your lender every step of the way.
When refinancing a vehicle into a new loan, always apply additional cash down. Your vehicle’s depreciated value may be much lower than the amount that you currently owe on the loan, making it very difficult to get a new loan. The additional cash down will always help you in the long run toward eliminating debt and improving your financial options in the future.
Find out about auto dealers in your area that do vehicle consignment (the dealer acts as your selling agent). They can sell your vehicle on your behalf through a written consignment agreement, which will include a fee to the selling dealer. Some consignment agreements allow you to keep the vehicle until the weekend arrives so that you can use it for work during the week. Put a "for sale" sign on your vehicle, keep it clean and ready to show, use as much word-of-mouth advertising as possible. Offer a sales commission to your friends, neighbors, relatives, co-workers, or whoever is instrumental in helping you sell your vehicle. Don’t get discouraged, stay the course. It may take a couple months to catch the perfect opportunity!
Finally, stay away from unethical agents that may recommend letting the vehicle go into repossession. These agents may further suggest that before the "repo" shows up in your credit file, buy this vehicle that is ready for delivery (a lesser vehicle that you will not like or want). Besides, most savvy lenders will ask about a second auto loan in your name and why. Good luck!
Agustin Vasquez, Jr. – General Manager, Mack Massey Chrysler Jeep Dodge, El Paso, Texas