Car Loans: Auto Insurance & Loans Relief

These are difficult financial times. You are not alone: so many of us have been hit hard by the coronavirus (COVID-19) pandemic. If you need debt relief from a car loan, here are some resources you can use if you need help.

Often, the first thing to do is to ask for help directly from the lender that gave you the loan. You write a formal letter, called a loan restructuring request letter, and request a modification to the terms of your loan. This letter is the place where you can express your financial troubles in more personal terms, and it gives you the chance to request and receive better terms (like a lower interest rate, lower payments, or a longer repayment period) or stop repossession proceedings. 

​The main reasons people need a car loan modification are job loss, a failed business, or a business that is suffering from the current economic slowdown due to the coronavirus (COVID-19) pandemic. If the reason you need assistance is because of financial difficulties related to the coronavirus (COVID-19) pandemic, it is important to say that, because there are debt relief programs directed at helping during those impacted by this crisis. However, other reasons you may need a loan modification or deferment may be: change in your family (death, divorce, child care or care for the elderly), military duty and relocation, or health problems. You do not need to get overly personal, just simply explain how your circumstances have changed in general terms, and ask the lender directly for the relief you want. 

​Most lenders are not interested in foreclosing on a car loan and repossessing a car that has diminished in value, so they are interested in working with you. Still, they need to know they will be paid if they come to new terms with you. That is why when writing your letter, you should explain that due to your changed financial situation, you need help but are not trying to avoid paying the debt. It’s also important to be clear about what relief you want. Rather than ask them what relief programs of loan modification options might be available, state directly what you want your monthly payment to be reduced to, what interest rate you want, or, if you want to defer payments for a certain number of months, tell them when you will be able to resume payments. For example, if you have been furloughed due to the coronavirus (COVID-19) pandemic but will resume work at a certain point in the future, tell them that, and give them the date on which you will be able to resume making payments.

The main thing for you to know is that you have rights. You have rights to your car as your property and rights not to be harassed about repayment.  

Sometimes you need more help than simply writing a letter to request a loan modification will give you. If you find yourself in that situation, Court Buddy can help. Sometimes it’s helpful to talk to a professional about the long-term implications on your credit and finances from taking a deferment or getting forbearance. We have experienced lawyers nationwide who can help you with your personal financial situation; they can talk with you to better understand your situation, help you understand your rights, provide you with advice and counsel, make a plan and negotiate for you and your family. There are many ways for you to keep your car and to secure a brighter financial future and peace of mind.