Having Issues Keeping up with Car Payments? Here’s How to Deal with Them

The number of people at least 60 days behind on car payments rose by nearly 27% in the time
between December 2021 and December 2022.

The number of people paying $1,000 or more per month for a vehicle went up to 15%, and
interest rates went up to 6.5% for new cars and 10% for used ones.

If you’re one of the people affected by this, you aren’t alone and don’t have to worry – this is for
you. We’ll discuss the difference between defaults and delinquency in car payments, how to
deal with delinquency, and what to do about new car loans with bad credit.

What Happens When You Miss Payments

Let’s start with missed payments and how they become delinquencies and defaults.
A delinquency is when you don’t make your car loan payment on time. You can usually miss
your payment twice – which means not paying for 60 days – before there are any serious
consequences, but you’ll still have late fees and a lower credit score.

A default occurs when you’ve missed your payment for more than 60 days and the lender needs
to take action – usually by repossessing your car.

If this happens, you take a massive hit to your credit score, and normally you don’t get a
repossessed car back even if you make more payments.

While you can’t do much after defaulting, you can come back from delinquency and keep the
damage to a minimum. Here’s how:

Keeping Your Current Vehicle – Even When You Can’t Keep Paying For it Right Now

There are two main ways to minimize the damage of delinquency. The first is to take full control
of your budget – personally and with your lender.

Make a budget – or look at your current one – and see what you can cut back on or cut out
entirely for a few months to get back on track with loan payments. If that makes things work,
great!

If it doesn’t, contact your lender. See if you can get a deferment – which just means getting
permission to stop making payments for a few months without going into default – or a new loan
that lowers the payments by extending the loan length.

This gives you more time and more wiggle room in your budget.

Getting a New, Affordable Car – By Trade or Purchase

But what if none of those work and you can’t keep your car? Then that means getting a new
one.

Getting a new car loan with bad credit will be difficult, but you already have important tools in
your arsenal – a budget and a current car.

You can trade in your current car and fold whatever you still owe into a new, less costly loan.
Or, if you purchase a new vehicle after returning or paying off your old one, you can negotiate a
lower payment based on your current budget.

There are ways to get and keep car loans with bad credit and ways to come back from a
delinquency or prevent it from getting worse. Just work closely with your lender and make the
best choice for you.