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COVID-19 Pandemic: What Should I Do if I Can’t Make My Car Payment?



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As the effects of the COVID-19 pandemic reach further into the economy, mandatory shutdowns and reductions in consumer demand will lead to job cuts. Many car owners will find it hard to make their car payments and avoid defaulting on their car loans. Others may put off a car purchase because of a tenuous job status. 

The first thing you want to do is not panic. The second is to contact your lender. Many lenders are offering special forbearance programs to help borrowers through the next several months. If yours is not, there are still options available. Doing nothing is an option that you should not pursue. Missing payments and potentially defaulting on your loan are mistakes that will haunt your credit for years after the crisis has passed. 

“Consumers who expect to be impacted financially by coronavirus, should contact their credit union to discuss options,” says Lynn Heider, vice president of communications and public relations for the Northwest Credit Union Association. “Most credit unions have programs in place, allowing members to temporarily skip payments, obtain emergency low-interest loans, and lower interest credit cards.” 

Most banks, credit unions, and other lenders don’t want to see you default on your loan or face repossession. It destroys customer relationships, it’s expensive, and it takes a lot of everyone’s time. Instead, they want to see you get back on your feet and make future payments. 

We’ll look at some programs already announced by major lenders, then discuss specific steps you can take if you’re in danger of missing a payment. 

Special Programs From Lenders

Several major lenders have announced programs to both help current borrowers and give new borrowers peace of mind. The credit arms of Ford, Nissan, General Motors, and Toyota will offer first payment deferrals of between 90 and 120 days to buyers of new vehicles. 

GM will also offer zero percent financing for up to seven years for top credit tier borrowers. The company is also providing complementary OnStar crisis assist services to current owners for a limited time. 

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Hyundai and Genesis are re-launching Hyundai’s job-loss protection program for buyers or lessees of new vehicles. If the customers lose their job, the companies will make as many as six monthly loan or lease payments. 

Ford’s credit arm has launched a website,, and a hotline where customers who need help can discuss options with the lender. 

“Ford is committed to lending a hand to the people who rely on us,” said Mark LaNeve, Ford’s vice president of U.S. marketing, sales, and service in a press release. “The peace of mind of our Ford and Lincoln customers is our top priority as we work through the developments of this outbreak.” 

Steps to Take If You Think You’re Going to Miss a Payment

If you have lost your job, had your hours reduced, or suffered a loss that makes it impossible to make your car payment, there are several steps you should follow before your payment is due.

Determine Your Loan to Value Ratio

It’s crucial you know where you stand with your car’s value and the balance of your loan. If you owe more than the car is worth, your options can be limited. When your vehicle is worth more than your loan balance, there’s a better chance you can deal with the issue and come out unscathed. 

Talk to Your Lender

It is best to talk to your lender before you miss a payment. In this time of national crisis, many lenders have created special programs or are being more flexible when working with borrowers. There’s an understanding in the marketplace that the effects on employment will likely be more temporary than long-term. Because of that, some lenders will allow borrowers to defer payments, have their payments reduced for a time, or their loan terms renegotiated. You may be able to refinance and significantly lower your interest rate or stretch the loan term to lower each monthly payment. 

Once you miss a payment, however, the lender may be less likely to work with you. 

Sell Your Car

If your car is worth more than the balance of the loan, you can sell it and pay off the loan balance before you miss a payment. You can then use your positive equity to put toward a cheap used car. If your credit rating is still high, you may be able to lease a vehicle with low monthly payments. 

Our used car rankings and reviews can help you find a pre-owned vehicle that will give you years of low-cost service. 

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When you’re underwater on your car loan, meaning you owe more than it’s worth, you have to work harder to protect your credit. You can sell your car to a private party, maximizing how much you get for it, or you can do everything possible to continue making timely monthly payments. 

Our guide to getting out of an upside-down car loan offers more tips on protecting your finances when you’re trying to sell a car that’s underwater. 

Work With a Credit Counselor

One of the first ways of getting out of debt is to stop digging the hole any deeper. A credit counseling service – not a debt consolidation company – can help you set up a budget and work with creditors to create manageable payment plans. The Federal Trade Commission offers a guide to finding a credit counselor who will help you, and not rip you off. 

Give the Car Back to the Lender

It’s human nature to want to protect your car from repossession, but it’s a bad idea to hide it from the bank. If you’ve missed several payments and know the lender is going to repossess your car, it’s much better to return it voluntarily than make them chase after it. 

Here’s why: The lender pays a fee to the repossession company to retrieve the car. The harder you make it for them to get the car back, the more the repo company can charge. The fees the repo company charges the bank are added to the loan balance you’re responsible for. In other words, the games you play only end up costing you money. 

Watch Out for Scammers

Unfortunately, some scammers use turbulent times to prey on vulnerable consumers. Watch out for deals that look too good to be true, such as credit repair services and offers to get you out of debt, for a price. The U.S. News Money team provides a guide to recognizing and preventing loan scams

More Tools From U.S. News & World Report

It is the mission of U.S. News & World Report to help you through life’s major decisions and events. We’ve created a centralized hub of coronavirus information to help you and your family weather this storm. We have resources ranging from how to avoid being infected to understanding your rights as a traveler with canceled vacation plans. Our education team has resources to guide you through changing financial aid policies and how to move your education online. 

The U.S. News Money team offers a wealth of information about navigating today’s turbulent financial environment while helping you protect your savings and retirement.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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