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.