A car is one of the most useful and convenient things you can ever own. It’s a people mover, a heavy object hauler, and convenient form of personal transportation all in one. Moreover, if you take care of it well enough, it’ll also be a very valuable asset that you can sell for quite a lot of money in the future.
It can also be one of the biggest expenses you’ll ever pay for, with some car models selling for prices that easily surpass the multi-million peso mark. Thankfully, there are many ways to get the car of your dreams in an affordable manner, with one of them involving taking out a car loan from a bank. However, should you start missing payments for your car loan, you may end up having your car repossessed by the bank that loaned you the money in the first place.
Having your car taken away can be quite a hassle, but it can be avoided. Here are some easy ways to help you avoid having your vehicle added to a lender’s list of repossessed cars.
Ask around for the most favorable car loan terms
Even before you take out a car loan, it’s best to make some inquiries with your local banks for the car loan that’s perfect for your budget and needs. Not all car loans are made equal and some banks may lower monthly payments in exchange for a longer payment period. In the end, it’s all about doing your due diligence by exploring all your options first.
Try to set aside money for future payments, not just for the approaching one
While it’s a good idea to start putting away money in advance for the approaching payment, it’s an even better idea to save up for any succeeding payments as well. This allows you a financial safety net to fall back on if an emergency happens close to your car loan payment date, such as a family member getting sick. It may be challenging since you’ll be limiting your spending for a good while. But by setting aside more money than just the exact amount for the upcoming payment, you can at least guarantee that you’ll never miss a single payment.
If you do miss one or more payments, you won’t necessarily have your car to be repossessed immediately. Just gather up enough money to make up for the payments you missed and pay your bank or lender immediately. There’s a good chance you may make the deadline before you default on your payments.
Call your lender in advance and ask to refinance the loan
If you’ve already missed a loan and you don’t see any way to afford your monthly payments in the foreseeable future, then you should get in touch with your lender or bank as soon as possible. This is so you can explain your situation to them and negotiate for your loan to be refinanced or restructured so that it can be easier for you to keep up on your payments.
Do note that the earlier you do this, the more favorably they’ll look at your case and accept your new terms. Of course, this will mean that you will be paying considerably more in terms of interest, but the trade-off is that your monthly payment will be at a much more affordable amount.
Remember, the key here is to act in good faith—they want you to be able to pay off your car and not have to repossess it. As such, it’s best to be honest and upfront with your financial situation.
Have your missed payment deferred
If you find that you’re unable to pay off a missed payment, you can also contact your lender or bank and have them defer the payment instead. This waives the missed payment and moves it to the end of your loan term. In this case, you only need to worry about the next upcoming payment rather than one you missed. This can help you avoid your car being repossessed.
Diligence and honesty are key to avoiding car repossession
Having your car repossessed can be quite the inconvenient and embarrassing problem. However, it’s easy enough to avoid this particular problem altogether. Simply be diligent with your payments, have a realistic budget, and be as honest with your bank or lender as much as possible. Keep the above-listed ways in mind, and you’ll be able to keep your beloved vehicle for years to come.