Losing your job, not making enough income, or going overboard when you first bought your car are three very common reasons that people find themselves between a rock and a hard place when it comes to meeting your financial obligations on your auto loan each month. While most people either scrape enough to get by, rob from “Peter to pay Paul”, or simply avoid repayment on time altogether, there are other options that are much more credit-friendly. These tactics can not only help you continue to pay your auto loan on time but you can also get a lower payment to deal with in the process.

Let’s take a look at some of the options you have for lower your note and making payments more affordable and achievable:

After the Purchase

Trade It In
Perhaps when you bought your current vehicle you overestimated the cost you could afford. Maybe your income has decreased since then. Maybe you know longer need a large vehicle that guzzles gas. Whatever the reason, you have the option to trade down for a more reasonably priced vehicle. When you do a trade in, consider also one that gets better gas mileage and maybe even costs less for repairs and maintenance. Not only will you lower your monthly note, you’ll also save a lot more money over the life of your new vehicle.  The downside to trading in occurs if you owe more on your present vehicle that the car you are trading it in for, in which case you’ll be required to pay the difference.

Negotiate With Your Lender
If your are facing financial hardship, realize that you are not the only one. If you contact your lender as soon as you know you are heading downhill financially, you may be able to negotiate your payments due to financial hardship. Many lenders will allow you to defer you monthly payments to the back end of your loan, thus giving you time to catch up but not necessarily lowering your payments. Speak with your lender about increasing the length of your loan terms, making payments smaller but your overall loan longer. Many will also agree to negotiate this with you because if you end up defaulting, they will likely lose money if they have to repossess your vehicle and see it at auction for less than the balance you owe on the loan.

Before the Purchase

Pay More Money Upfront
If there is a vehicle that you are really interested in, you should practice patience and save more money for the car before purchasing. A larger down payment will ensure lower monthly payments. Figure out the purchase price of the vehicle you want and then work to save a sizable percentage of the amount as a down payment. If you find that you can not save enough or fast enough, consider downgrading your choice in vehicles. Some “cooling off” time may help your realize that the vehicle you WANT is not really the vehicle you NEED. A less-expensive car will guarantee lower payments.

Use Your Home Equity for the Loan
The amount of equity you have in your home may afford you that new car with more reasonable payments. Since the term of your home equity loan would be for a longer period than traditional car loans, you’d have lower payments each month. Additionally, the interest is tax deductible. While getting cash for a new vehicle using home equity may be a reasonable option for you, you MUST be sure to make each monthly payment on time, every time. A loan like this is using your home, not your vehicle, as collateral. Missing a payment means the lender can literally take your home into foreclosure. No lower payment on a vehicle is worth that consequence no matter how badly you want that vehicle.