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KDP/Getty Images October 27, 2022 Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Are you experiencing financial hardship and struggling to afford your car payments? If your lender offers modifications on car loans, you may be able to get some much-needed relief. Loan modification involves adjusting your monthly payment amount, due date or sometimes your interest rate. When you are behind on payments, these options can help you avoid damaging your credit score or having your car repossessed. What car loan modification is
As the name implies, a car loan modification entails changing the terms of your loan. The lender may agree to lower your , defer your payments in the short term or change your payment due date so it works better for your budget. Loan modification is not readily available to all borrowers, though. While lenders generally aren’t fond of repossessing the vehicles of borrowers who’ve defaulted on their loans, you’ll have to plead your case. Part of that is convincing the lender that you won’t be able to repay what you owe unless they agree to modify your loan. How to get a car loan modified
You’ll need to contact the lender who originated the loan directly to discuss your situation and determine your eligibility for a loan modification. Be mindful that lenders will typically review your payment history before deciding. It’s worthwhile to reference that you’ve been a good customer and managed your loan responsibly. Call your lender right away
Put your request in writing
If loan modification is available, you’ll typically be required to put your request in writing. You’ll submit the request to the lender, along with proof of your hardship and any other information or documents the lender requests. Give the lender as much detail as possible about your situation. If you lost a job or experienced some other significant or unexpected life change, share that information in your hardship letter. It is also a good idea to explain how the modification will help, such as allowing you to continue making payments or make payments on time. Your lender may also require financial documentation such as copies of your monthly bills and bank statements or pay stubs. Confirm receipt of your hardship request
Keep the team helping with your modification in the loop, explaining that you are still trying to make payments even amid financial challenges. How to know if you should modify your car loan
Consider modifying your car loan if your financial situation has suddenly changed due to a job loss, temporary layoff or furlough, medical emergency or another circumstance out of your control. It could also be a smart financial move if you have recently experienced reduced wages. You may also want to explore a loan modification if your car is worth far less than what you owe. This means you’re . Selling it to get a more affordable vehicle would prove to be rather challenging and could cost you a fortune. Auto loan modification vs refinancing
It’s easy to confuse auto loan modifications with , but the two aren’t quite the same. Both can possibly get you a lower payment. But unlike auto loan modification, refinancing your loan involves swapping your current loan for a new one with different terms. You’ll likely need good or excellent credit to qualify, and you’ll have to go through the same application process as you did when you took out your current loan. Most lenders also that the mileage on your car does not exceed 100,000 miles, and you probably won’t qualify if your vehicle is more than 10 years old. When your application for the new loan is approved, the lender will pay off your old loan, and you’ll resume payments with the new lender. But with a car loan modification, you’ll work with your current lender throughout the entire process. The bottom line
It can be stressful if you can’t afford your car payment and aren’t in a good position to refinance, but don’t quite have the option to go without a car. Consider reaching out to your lender to request a car loan modification. Ask about reduced monthly payments, a decreased interest rate, or even an alternate monthly due date if that will help you make payments on time. If modification is not an option, there may be other programs to help you find relief until you get your finances back on track. Learn more
SHARE: Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Related Articles