- Anyone who has a car loan is obligated to pay it off, regardless of the current situation.
- Most lenders are giving their lendees a forbearance program at this time.
- The truth of the matter is that missing one or two payments won’t really be as catastrophic as you may think, especially with pandemic.
Similar to purchasing a house, a vehicle is a huge investment. Although buying a car outright is what many people aim for, most people do require a loan. Car loans are used to help pay for a car over a set period of time, regardless if it’s new or used.
After the initial purchase, the person has to pay off the loan in order to have full ownership of the vehicle. However, with COVID-19 turning the world upside down, you may be wondering how it has affected your auto loan.
Do I Still Have to Pay my Car Loan?
Yes, anyone who has a car loan is obligated to pay it off, regardless of the current situation. Despite the auto industry coming to an abrupt halt, that doesn’t exemplify people from paying what’s owed.
People must pay off their loan in order to avoid being turned over to collections. If you don’t pay off the loan, your credit score will be negatively impacted. However, if you have lost your job due to COVID, your lender will probably be willing to work with you.
What if I can’t pay off my loan because of COVID-19?
Unfortunately, COVID-19 has made it difficult for many people to keep their finances in order. Aside from the car loan, people still have other responsibilities they must attend to and if laid off or fired, making ends meet is nearly impossible. So, what happens when you find out you can’t pay off your car loan?
If you’re unable to pay your loan, you need to remain calm. Panicking is not going to help the situation. If anything, it will make things feel worse than they really are. You do need to get a hold of your lender and explain your situation.
While this is nerve-wracking, most lenders are giving their lendees a forbearance program at this time. A forbearance program is when companies and organizations halt mandatory payments. This can be a person’s mortgage, the bills or a car loan. This program can last for a few months or up to a full year, but this depends on the company.
You may be wondering that even with the temporary reprieve from paying off the loan, your credit score will be affected. Sure, putting off a loan payment is something that would greatly impact your credit.
In fact, this is the main reason why people are so afraid of calling their lenders. However, as long as a forbearance program is in place, your credit score will not be affected until it is over.
Something that everyone needs to know about forbearance programs is that they must be approved. Being approved for this program can take some time, so do not wait until after your payment was due to inquire.
Another common concern is what will happen if you’re still unable to pay off the loan when the forbearance program ends. This depends on your payment history and whether you made all the required payments under forbearance.
If you’re someone who has perfect credit and has never missed a payment, the lender may extend your forbearance program. This may not be the case for people who have less-than-ideal credit. However, they might be offered a reduction on their payment, given the current circumstances.
What happens if I miss a payment for my car loan?
A lot of people think that if they miss just one payment on their loan, their credit is ruined for life. The truth of the matter is that missing one or two payments won’t really be as catastrophic as you may think, especially with pandemic.
Just remember to contact your lender if you’re positive that you won’t be able to make the payment. They’ll give you some leeway and extend the due date. However, this will only occur once in a while and you can’t continually shy away from making a payment.
COVID-19 has made even life a lot more stressful than it needs to be. However, there are ways to manage every-day tasks with ease. Remember to use this information when you’re unable to pay off your loan. It can take off a lot of stress and make things easier for a while.