How to get back on track with delinquent car payments

By Jackie Lam

Reviewed by Kimberly Rotter

May 19, 2023

Read time: 2 min

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Last year, I bought a new car. It was the car of my dreams and had everything I wanted in a set of wheels. To buy it, I took out a loan. But a few months in, I realized I was in over my head financially. I was struggling to keep up with my car loan payments. I didn't know what to do, and I was scared I might lose my prized and cherished car. 

If you're falling behind on your car payments, you're not alone. In January 2023 about 2% of auto loans were labeled "severely delinquent" and at least 60 days behind payment—the highest rate since 2006. 

Want some help to get back on track with your delinquent car payments? Here are a few ways you can move in a positive direction:

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#1. Crunch the numbers

To find out what the best option is out there for you, learn where you stand financially. Check the following: 

  • How much you owe on your car

  • How much your car is worth

  • Your credit score—this determines what financing options are available

  • Your debt-to-income ratio (aka your monthly debt divided by your monthly pre-tax income)

#2. Look at your entire financial picture

Take a good, hard look at the reality of your money situation. Figure out why you've been on the struggle bus with your car payments. There's a lot to mull over, so take a step back, hit pause, and don't rush. 

Give a look at how much money is coming in and how much is going out. You can use a money management tool like the Achieve MoLO app, which helps you keep track of how much money you have left over each month. This can help you see how a car payment impacts your ability to tend to your other financial commitments and goals, both short- and long-term. 

Are you having a hard time paying off your car because you’re: 

  • Stretched thin financially (hello, inflation!)

  • In-between jobs

  • Juggling other debt

If so, it might be a good idea to explore some money-saving options.

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#3. Talk to your lender 

Reach out to your car loan lender and see what options are available. You never know! Depending on your situation, they might have hardship assistance options to offer.

Loan modification. It’s uncommon but possible to get your lender to agree to make changes to your loan. If you get a lower monthly payment, you’ll pay for a longer time. That'll cost you more interest. 

Ask for a deferral. Some lenders offer the opportunity to defer payment. This means you can skip a payment (or maybe two or three payments) without penalty. Be careful, though. Some deferral agreements require that you get fully paid up at the end of the deferral. Having to come up with those missed payments later on might not help you.  

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#4. Consider a trade-in

Sometimes, no matter how much you love something, letting it go is the best thing for all involved. Trading your car in for something less expensive could help you get an affordable payment, or maybe even no payment at all. 

Research what’s available in your market and how much you can get for your car before you pull the trigger. 

Whatever you do, don't ignore your debt situation. To get out from falling behind on your car payments, learn your options and make your moves.  

Jackie Lam - Author

Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.

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Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

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