Yahoo Finance Need a Car Now and Can’t Afford Payments? Ways To Get Where You Need To Go
Life happens. And the life of cars happens as well. Yours might have broken down and need repairs, but not everyone has the financial means to take care of these. If you find yourself short of money and cannot afford to make your monthly car payment, are there any options for you?
See: 9 Red Flags To Watch Out For When Buying a Used Car
Learn: How To Save $200 on Your Grocery Bill Every Month
Unless you live in an area with great public transportation, a car is a necessity. As a recent Santander survey found, a car also is a means to achieving financial prosperity. The survey found that 78% of respondents require vehicles and 74% of Americans are willing to sacrifice other budgetary items to maintain access to vehicles.
“We’ve seen consumers adjust their budgets to maintain access,” said Bruce Jackson, CEO and president of Santander Consumer USA. “In fact, nearly three-quarters of middle-income Americans are willing to sacrifice budgetary items — including eating out, vacations and entertainment — to retain auto access.”
When purchasing a vehicle, he added, it is important for consumers to understand what options are available in terms of loans and lenders.
“New car options aren’t the only ones that qualify for auto loans,” Jackson said. “Used-car loans and leases may be appropriate options that may fit a consumer’s current financial condition.”
If You Can’t Make a Monthly Payment
While this situation is stressful, there are things you can do.
Contact Your Lender
First, as Experian explained, contact your lender.
“It might not seem like the best idea to let your lender know that your financial situation is a bit shaky,” wrote Ben Luthi of Experian. “But because vehicle repossession is usually the most time- and resource-intensive route when payments are missed, many lenders are willing to work with borrowers to get their payments under control. The sooner you get in touch, the more options your lender may be able to offer.”
Noted: Don’t Buy a Car at a Dealership on This Day of the Week
Ask for a Deferral
Luthi noted that you can also request a deferral, which, if approved, would allow you to skip a small number of payments without penalties or fees.
Refinance Your Car Loan
According to Luthi, you may be able to get a loan with a longer repayment term than what you have left on your current term, which can help reduce your monthly payments.
Trade In or Sell Your Vehicle
Finally, if you can’t refinance, you might have to let go of your car.
“You could either trade it in to a dealership or sell it to a private party and buy a used vehicle,” Luthi wrote. “Note that trade-ins tend to be more convenient, but you’ll typically get more value with a private-party transaction.”
If You Can’t Pay for Repairs
Getting and maintaining a car is expensive and puts a strain on many Americans’ wallets. According to AAA, the average yearly cost to own and operate a new vehicle in 2022 was $10,728, or $894 per month.
A FinanceBuzz survey found that 69% of drivers say they delay getting maintenance done even after they know it is due, while 58% say they could not afford an emergency car repair costing more than $1,000 right now.
But there are options that can help, such as financing auto repairs with a personal loan.
“And depending on the lender and whether you’re approved, funds may be deposited into your checking account as soon as the next business day,” according to Credit Karma.
Another option is putting it on a credit card. But with the current ballooning rates, that might end up costing you much more.
What Are Alternative Means of Transportation?
If none of these options work for you, there are other ways to get you where you need to be.
The first option that comes to mind for individuals suddenly finding themselves without transportation is ridesharing.
“It’s available virtually on demand. An Uber or Lyft carpool to and from work could be an extremely cost-efficient stopgap measure,” said Peter C. Earle, economist at American Institute for Economic Research.
Another option for someone in desperate need of a personally owned vehicle could get a cosigner for a loan, Earle said.
“The underlying reasons for the inability to afford the down payment will be a factor in getting one, of course,” he said.
Earle added that it’s not unheard of for employers to subsidize rental car costs temporarily, especially if the employee is mission critical. “In a tight spot, it could be worth a conversation with the boss,” he added.
Another option, of course, is public transportation.
“If the budget is tight and you need a car pronto, lean on public transportation,” said Tarek El Ali, CEO at Smart Insurance Agents. “Buses, trains and subways can be a cost-effective way to get around. Might not be as convenient as having your own car, but it’s a viable option to bridge the gap.”
According to El Ali, it’s also worth considering car-sharing services such as Zipcar or local rental agencies.
“These allow you to rent a car when needed, without the commitment of a long-term contract,” he said. “While the costs can add up, it’s often more affordable than full ownership. Look for deals or discounts to stretch your dollar even further.”
Finally, he recommended exploring peer-to-peer car rental platforms such as Turo.
“Here, you can rent cars directly from individuals, often at lower rates compared to traditional rental companies,” he said. “It’s a flexible solution that lets you find a vehicle for your immediate needs without the commitment of ownership.”
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This article originally appeared on GOBankingRates.com: Need a Car Now and Can’t Afford Payments? Ways To Get Where You Need To Go
