If a financial setback has threatened your ability to make your regular car payment, your best option is to get ahead of it before it turns into a real problem. Rather than just ignoring the problem and hoping for the best, contact your lender. In some cases, a lender may be willing to work with you, especially if you've made arrangements in advance. Sometimes, the lender will allow a missed payment or may reduce payments for a period with the entire balance of the reduction due at the end of the note. Alternately, refinancing may be another possible option. To refinance you will need good credit, not credit damaged by a missing or late payment. Some lenders are generous and will allow for a forbearance, but be advised. While repossession is an expensive and inconvenient proposition for a lender, some lenders still rely on it as a first resort. Knowledge of your lienholder's policy in this regard is useful information to have.
You May Just be Short for the Moment
If you're only facing a temporary financial setback, then negotiation for a lower payment or forbearance might be a viable choice. However, if it appears you are going to be faced with a longer period of financial hardship, you may want to consider selling the car. To ensure this strategy will work for you, you'll first need to make sure the car is worth selling. Unfortunately, many people find themselves in a negative equity or "upside down" position in their loan. Negative equity means that a person owes more money to pay off the car than the car is worth. If this is the situation, selling the car would only add to the financial woes. On the other hand, if you can sell the car for more than it's worth and buy a less expensive car, you will be in a position to pay off the lender and help yourself through the acquisition of lower payments.
Don't Let It Go
Again, if a financial setback threatens your ability to make a car payment, it is vital that you contact your lender immediately. It is extremely unwise to hope that the problem will somehow just go away. Even if the setback is temporary and you will only be missing one payment, contact with the lender is still important. If it is possible, you may want to seek help from a friend or family member to get you through your current circumstance. If you can secure such assistance, it is important to remember that in the next month you'll be facing not only your regular car payment but the repayment of the debt to that friend as well.
If you think the lender won't notice your missed payment, rest assured, they will and, if the delinquency reaches 90 days, it will be communicated to credit bureaus by the lender. Attack the problem proactively and save yourself potential severe damage to your credit and the possibility of losing your transportation as well.