COVID-19 developments have brought many challenges to economies, companies, and individuals around the world. If your circumstances have changed and you find yourself struggling to keep up with your car loan payments, here are a few tips on what you can do;
Talk to your auto loan provider:
This is the absolute first, most crucial step you should take. If you feel like you don’t have the funds for your upcoming payment, reach out to your lender, and explain your situation before you pass the due date. The chances of your bank helping you are high if you go straight to them. Waiting up until after the payment deadline has passed to talk to your bank will potentially snowball into multiple problems and give you a lower credit score. Making sure to be clear and assuring your lender that you’re working on addressing the issue is the best way to find a solution.
Check for payment relief or deferral
Many car finance companies, including the ones run by automakers, are being more lenient and offering assistance to customers facing financial strain during the current situation. Some automotive companies are offering payment deferral programs – this allows current car owners who have been impacted by coronavirus to ask for delayed payments for up to three months and new car buyers to put off making their payment for the first few months. You will also find that banks across the region have also set up several initiatives to offer financial relief to customers affected by the pandemic.
Every lender has a different approach and may offer varying reliefs. Some offer lower payments for a short period of time or eliminate interest for a few months, while others allow you to hit pause and skip an installment or two, adding the deferred amount onto the end of your loan. To know what kind of relief options you’re eligible for, speak to your lender to see what solutions they can give you to find the best approach to support you during this period.
Try to sell the car or trade it in:
If none of the reliefs apply to you and you find yourself in urgent need to pay off your loan, the best option is to opt for selling your car or trading in with the lender. Keep in mind that due to the current economic conditions, lenders might offer you a lower trade-in value which may not cover the full loan amount. If this is the case, you are still liable to pay the remaining balance; therefore, it’s best to try and sell your car privately as you will likely get a higher value. Read here to know more about selling a financed car in the UAE.
The point here is that there is no need to panic. Communicating with your lender is the key to finding a solution that will work best for you while you weather any financial challenges you may be facing due to the coronavirus pandemic.