What do I do if I can no longer afford my car loan?

Finances are tight, and with a baby on the way, something has to give. I can no longer afford my car. What should I do if I can’t pay my car loan anymore?

Answer
Congratulations on the baby! I am sorry to hear you can no longer afford your car loan, but I am happy to help you figure out the next steps.
You have a couple of options. Before you default on your loan:
  • Talk to your lender
  • Refinance the loan
  • Surrender your car
Talk to your lender: Be upfront with your lender. Often, they can find ways to help you. This could include allowing you to defer the loan, which will freeze or lower your payments for a short time. They may even be able to renegotiate your deal.
Refinance: You may be able to refinance into a new loan with lower interest or lower monthly payments. On average, car owners pay $85 less every month by refinancing their auto loans. See if refinancing will save you money quickly and easily with the Jerry app.
Surrender your car: If you don’t need your car anymore or can get around without it, you could always surrender the car to the bank.
No matter which you choose, any of these options is preferable to defaulting on the loan. Defaulting can lead to a hit on your credit score, repossession, and collectors garnishing your hard-earned wages. So, talk to your lender and come up with a plan instead.
Lauren Smith
Answered on Nov 19, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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