Behind on Your Auto Loan: Tips to Get You Back on the Road to On-Time Payments Once Again
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Behind on Your Auto Loan: Tips to Get You Back on the Road to On-Time Payments Once Again

About 7 million people in the U.S. were at least 90 days behind on their auto loan payments in the beginning of 2019 according to the Federal Reserve Bank

November 24, 2021

Ensuring that you pay your bills on time is essential to maintaining or improving your financial situation. Late payments will show up on your credit report, hurt your credit scores, and limit your ability to get other credit. So what should you do if you're one of about 7 million people who fall 90 days or more behind on your car payments? There are things you should do when calling your lender.

Call your lender as soon as you know you will fall behind on your payments.

Talking to your lender early suggests that you want to be responsible and pay your loan, even if you might be late with a payment or two. The sooner you contact the lender, the more choices the lender will be able to offer you. If you wait until after you fall behind, you might find the lender isn't willing to help you at all.

Ask if you can change your payment due date.

Your lender may agree to change the date your auto loan payment is due so that it is after you get paid or expect to receive your income. This could help you avoid missed payments and late fees. If you can't change your due date, you can ask if it's possible to waive the late fees.

Work with your lender to develop a payment plan.

Examples of payment plans could be:

  • Extending or postponing payments may help you get back on track and give you time to figure out a plan to catch up. Extending or postponing payments can lower monthly payments, but it can also lengthen the term of your loan and increase the total amount you have to pay for the loan.
  • Making smaller payments more often, such as twice a month, could help you spread out your payments and get caught up.

When you talk to your lender, ask if there is a cost to make the change to your payment plan. There could be a fee or other extra cost, or you may end up paying more over your loan term. Be sure to ask that the details of the payment plan be noted on your account. If possible, get confirmation in writing of any change in your payment schedule or amount.

Think about whether your vehicle is still affordable.

Sometimes your financial situation changes and a purchase you made is no longer affordable. If this has happened to you, consider trading in your current vehicle for a more affordable one. If you sell or trade in your current vehicle, its value and how much you still owe will be an important factor in your decision. Keep in mind, however, that it's usually better to sell a vehicle outright as opposed to trading it in, which can net you a significantly reduced value.