So You Can’t Make Your Car Payment This Month?

By John Hayden

It’s easy to get swept away by excitement when choosing a new-to-you car and applying for an auto loan in Nova Scotia. After all, everyone wants to close the deal: seller, lender, insurer. And the driving force behind the whole transaction: the buyer. But then reality strikes, and some borrowers may have to skip a car payment. However – according to the credit experts at Hayden Auto Loans – the worst thing you can do is to ignore this problem. A missed car payment can be the first step along an expensive path that leads to fines and late charges, possibly followed by defaulting on your loan and repossession of your vehicle.

Catch Up Quickly on Your Car Payments  

Anyone can forget to pay a bill on the due date, and if you settle it within a day or so, the chances are good that this won’t be much of a problem – although you will probably have to pay a late settlement fee. Neither will a brief lapse like this affect your credit score, as lenders generally report late payments to credit bureaus only when an account is thirty days or more in arrears. Nevertheless, you may get a friendly reminder (or two) from your lender.

Getting Help in Halifax When You’re Thirty Days Late

The last thing any lender wants is to deal with delinquent debts. That’s why they’re often amenable to seeking a solution to your car payment problem that’s mutually acceptable to everyone involved.  With a little luck (particularly in the friendly Maritimes), you may be able to negotiate a penalty-free grace period for catching up on your car payments, and even avoiding annotations on your credit report. However, many lenders will charge interest on amounts unpaid and outstanding.

Ninety Days Late Is Time to Restructure your Auto Financing

With every missed deadline, your situation gets more serious. At the end of two or three months with no car payments, some lenders will rate auto loans as delinquent. This means they can recoup their losses by repossessing your car and selling it. Even if things get to this stage, there’s still a chance you could reinstate your auto financing by paying the missing instalments. Another approach is to negotiate new terms with your lender, particularly a longer plan that lowers the amount you fork out each month.

What If I’m A Year behind on My Car Payments in Nova Scotia?

Few lenders will allow such a situation to continue for so long, preferring to declare delinquency and cut their losses by repossessing your car and blotting your credit record. Nevertheless, the Hayden consultants know that it’s always better to seek positive outcomes with their late-paying clients, especially as there are several solutions to hand:

  • Find out exactly how much you owe, and prune your family budget to free up extra cash each month;
  • Develop extra sources of income (part-time jobs, gigs, selling stuff online) and use this money only to pay down your auto loan debt;
  • Defer missed payments to the end of your term, and ask your lender to modify your financing agreement;
  • Change the Due Date so that bills fall due on days when you know money will be coming into your account;
  • Refinance your loan at better terms or over a longer period, particularly if your car is relatively new;
  • Trade in your wheels for something smaller, older, or cheaper, with more affordable car payments;

Takeaway: Smart buyers plan their personal budgets years into the future. They make sure they’ll be able to cover all car payments, regardless of economic or financial turmoil. By building up a solid cushion of savings, they know can meet their commitments during even the toughest times. If you want to apply for an auto loan in Nova Scotia, click here.

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