Introduction

Missing a car loan payment can put you in several challenging conditions. Example – a sudden fall in credit rating. However, before you get too stressed out about this situation, you should know that relevant solutions are available.

However, it is advisable to first check your affordability before taking a car loan. Do that through a soft check process without getting a search footprint. That is a good suggestion not only for the long-term or secured loans but also for the small term loans. Apply for the short term no credit check loans and you will know how much you can afford. Follow the same strategy for car loans as well, and you will never miss a repayment.

What to Do When You Miss a Car Loan Payment?

The most promising solution is Improving your payment behaviour is the best thing to do. Try not to miss another instalment. But that one that you have missed affects your credit report, car loan record, and even future loan deal offers.

Don’t worry, with an organized approach, you can easily manage this condition. Let’s read below how you can handle the financial issues that happen after a missed car loan payment.

• No need to panic Plan to take immediate action

Exactly, no need to feel anxious about that missed payment, in fact, plan for several instant actions.

• Immediate actions
• Check the latest status of the payment record

Check your latest loan payment record. You will get to know the missed payment date, added interest, and whether there is any penalty. Only by knowing the actual situation can you work on the most dependable way out.

• Pay as soon as possible

Now that you know about the details of missed payments, it is time to pay them as soon as you can. This is the most responsible thing a borrower should do in case of a skipped payment. Sometimes lenders do not report the payment issue to the credit reference agency right away. Hence, pay the instalment and save yourself from another bad experience.

• Know your loan terms

Knowing your loan terms is another smart move. The loan terms and conditions always explain the relevant actions, penalties, and fees by the lender in case of repayment issues. This will help you stay cautious about future repayments.

• Contact your lenders

Always contact your lending company to talk about the matter. This reduces the stress between the lender and the borrower. Also, the loan company considers you a responsible person who wants to fix things.

How to Approach the Conversation?

• Be clear and transparent about your conversation.
• If you think some issue may happen in future payments as well, inform the lender. Usually, private lenders are happy to change your repayment schedule to make it most convenient.
• Ask if your loan company can waive the penalty of the late fee. Also, confirm if they can delay reporting to the credit reference agency.

Understand the Consequences of Missed Payments

If you know the aftereffects of a skipped instalment, you will be even more careful with future repayments. The consequences are short-term as well as long-term.

• Short-term consequences
• Credit score damage

This is the very first condition you will see. Your credit rating goes down if you miss or even delay a car loan payment. A decline in credit rating causes a poor credit situation, making it difficult in the future to qualify for loans easily.

• Late fees

Yes, that is also an evident result of a skipped payment. You may request the lender to waive that fee. However, you may not be able to convince the lender.

• Collection calls

Those annoying collection calls are frightening, too. You don’t want to feel stressed out due to such calls while working in your office.

• Long-term consequences
• Vehicle repossession

In case the incidents of missed payments happen again, the final consequence will be car repossession. You certainly don’t want this.

• Loan default

After vehicle repossession, your car loan will be tagged as default, which affects your personal finances in totality.

• Bring back the payments on track

After you know the results of missed payments, it is time to figure out things and work on effective ways out. Below are several options to catch up on the missed payments.

• Options to catch up on payments
• Make a part payment

Pay at least a part of the instalment. Some lenders allow it quite easily, especially the online lenders with a flexible approach. However, in that case, you will have to pay the rest of the amount in the next instalment. It is better to arrange funds for that extra amount.

• Use emergency funds or additional income

Use any available additional source of money, such as income or emergency funds, to make the payment. It is great if you can pay the complete skipped amount.

• Split the missed payment

Ask your loan company if they are ready to split the payment in the next few months. With every instalment of the coming months, they will add a small amount of the missed repayment.

• Think of loan modification or refinancing

Yes, it is also a popular option that you can work on. Either get your loan modified or get it refinanced. Choose the one that suits your financial circumstances better.

Loan Modification Vs Refinancing

• Loan modification is a feature in which your loan company modifies the terms and conditions of the current loan. Example – extension of loan tenure to reduce the size of the monthly income.
• Refinancing is about taking a completely new loan, replacing the current one with more flexible terms. Many borrowers choose this option if they get into a poor credit situation due to missed payments. There are plenty of car loans in Ireland with bad credit options offered by online private lenders.

Understand Your Rights as a Borrower

With all the above-mentioned efforts, it is also wise to know about your rights. You may need to exploit them.

• Repossession laws: Usually, your loan company cannot take or repossess your car without a legal notice or court order. However, for that, it is necessary that you have paid at least one-third of your loan.
• Data protection: Loan companies are entitled to intimate you before they report your missed payment to the credit reference agencies.
• Get professional financial advice: If you are not aware of the consequences and legal actions, it is better to take professional advice. Find a debt advice organization or a financial counsellor for this purpose.
• Avoid missing repayments in the future: Yes, this is the most important thing to do. You know it too, missed repayments in the future will create the same chaos again. Pay the instalments on time, and keep your financial life hassle-free. Also, protect your tag of car ownership.
• Rebuild credit: When you start repaying on time, your credit score builds again.  Credit rating improves, and you can now qualify for new loans and financial product options again.

Conclusion

Missed repayments of a loan, but don’t make it a big issue. Otherwise, you cannot think clearly. Things happen, and no one wants to miss the repayments intentionally. Hence, make your best efforts, as things are destined to get better finally.