The Sum Up: How to Get Help With Your Auto Loan During COVID-19

Getting financial assistance during the COVID-19 pandemic has been crucial for many Americans, particularly those who have lost their jobs and income. While some forms of assistance like financial stimulus checks and small business loans have received a lot of attention, there’s one area that hasn’t: assistance for automobile loans.

At Addition Financial, we consider it our responsibility to keep our members up to date on important topics and resources. A recent article on the Experian website talked about automobile loans and how consumers can get assistance. Here’s what you need to know:

Does the Federal Government Guarantee Car Loans?

You may have seen news about homeowners getting assistance with mortgage payments in the form of expanded mortgage loan forbearance, which was included in the CARES Act.

Automobile loans were not included in CARES Act protection because they are not guaranteed by the federal government like mortgages are.

The lack of a guarantee doesn’t mean there’s no help available. It means only that consumers will need to turn directly to their auto lenders to learn what assistance they can get.

How Can Lenders Help Consumers with Auto Loans?

While the federal government is not providing assistance for auto loans, there are still things you can do to get the help you need. Here are some of the options available from lenders.

Deferred Payments

While programs may vary from lender to lender, one of the most common options for help with your car loan is to defer a payment. Some lenders offer the option of deferring a payment for a set time or for skipping a car payment in a time of need.

At Addition Financial, we offer the Skip-a-Pay program, which allows members to skip one personal loan payment during a rolling 12-month period. During the COVID-19 pandemic, we have expanded the program to allow two skipped payments per 12 months and we have also waived the $15 program fee.

Refinancing

If you have good credit and a solid payment history for your existing auto loan, another option you may want to consider is refinancing your loan to lower your interest rate and reduce your monthly payments.

Refinancing can help you save money during the COVID-19 crisis and beyond because you may be able to reduce both your monthly payment and your interest rate, meaning you’ll pay less over the term of your loan.

What Are Some Other Ways to Save Money on My Car?

While lenders may be able to help you out with a deferred payment or a lower interest rate, there are other options if you want to save money on your car. Here are some suggestions:

1. Talk to your insurance carrier. If you’re working from home and you previously did a lot of driving for your job, you might be able to negotiate a lower insurance premium based on your reduced mileage. You may also be able to eliminate unnecessary coverage or bundle your insurance coverage to save money.
2. Downsize your vehicle. For people who have lost their jobs or who have less income than they did before, downsizing to a less expensive vehicle may be part of the solution. If you choose this option, be aware that you’ll likely fetch a higher price from a private buyer than you would if you sold to a dealer. You can use the money you make toward a down payment on a less expensive car.

The one potential downside of selling your car is that it can take a while to find a buyer. However, if you anticipate that you’ll be without a job or living on reduced income for a while, it’s an option worth considering.

It can be stressful and upsetting not to have enough money to meet your financial obligations. At Addition Financial, we always want our members to know they can come and talk to us if they have a problem. We’re happy to work with you and help you arrive at a solution that works for you.

Are you in the market for an auto loan or looking to refinance your existing loan? Click here to learn about our loan programs or start the application process.