How to Cut Car Payments When Unemployed

Your lender may be able to offer loan assistance if you become unemployed. If your lender changes the terms of your loan, the process is known as a loan modification. Rather than repossess a vehicle for nonpayment, many lenders have programs in place to help distressed borrowers. Determine your budget and loan goals before contacting your lender. You can likely bring your loan current if you've defaulted or lengthen your loan term to decrease your monthly payment amount.

Instructions

1

Go over your budget to determine how much you can afford to pay toward your loan payment. If you are behind on payments, determine how long it will take you to catch up on your past-due amount. Figuring you budget ahead of time can help you to work out an affordable plan with your lender.

2

Make a copy of your unemployment paperwork. Expect your lender to ask for this piece of information to provide proof of financial hardship. Locate your bank's contact number and account number.

3

Call your lender and speak to a customer loan representative. Or, if your lender is local, go to a local branch with your unemployment paperwork. Tell the representative that you've become unemployed and ask if your lender can help with car payments or modify your loan.

4

Go over your loan and payment options with your lender. Ask about loan deferment, which allows you to skip up to several monthly payments without penalty or credit bureau reporting. This can also help to take your loan account out of default if you have already missed payments.

5

Talk about any other options available to you, such as paying less than your monthly payment amount for a period of time or extending your loan term to decrease your monthly payment. Ensure any agreements are affordable and do not exceed the payments you've budgeted for earlier.

6

Give your lending representative your proof of unemployment paperwork. If your lender is not local, expect to provide the proof through mail. Get any term or payment changes in writing.

7

Sign any paperwork that the bank requires in order to complete the loan modification process. Mail your paperwork back promptly if your lender is not local. Make or keep copies of any paperwork you sign.