Car loan payments are one of the largest annual regular expenses for Americans. If you’re like most people, you’re probably on your second car and have been making payments on it for a while now. If you stop paying your car loans though, will your lender suddenly forgive all the debt?
Why stop paying on my car loans?
Many people have trouble paying off their car loans because they don’t like the idea of a long term commitment. However, if you know that your car is going to increase in value over time, then doing so will allow you to save money and pay off those high monthly payments a lot faster.
It’s easy to fall into the trap of thinking that if you just make enough money, you can pay off your car loan. That’s not the case. You need to take a hard look at your debt and figure out how much you can afford to pay each month on your car loan before making any changes. You should talk with a financial advisor before taking any drastic measures.
How can I avoid penalties and fines when I stop making payments?
It is common for consumers to stop making payments on their car loan because they have fallen behind on their payments. Many people do not realize that there are significant consequences for this action. You can avoid these consequences by following a few simple steps and speaking with an experienced bankruptcy attorney.
When you stop making car payments, you’ll likely be subject to a collection action in addition to the normal penalties and fines. In many states, your driver’s license may also be suspended even if your car is still being driven on public roads.
What are the alternatives to stopping car loan payments?
If you’re struggling to pay on your car loan, there are several ways to get out of it. One idea is putting the loan on an installment plan for two to three years. Another option is asking for a short-term credit line with a lower APR that you can use only until you get ahead financially. This lets you keep up your payments while still being able to afford gas and other essentials.
The alternatives to stopping car loan payments are varied. If you are unable to stop your payments in the short term, a very popular strategy is to use the time that you would have spent paying on your car loans on other things such as saving for retirement or even making improvements to your home.
Car loans are a great way to get the latest car on the market. But, if you’re thinking about taking one out and want to save money, it’s important that you stop paying on your car loan at least once every six months so your interest is lowered.
With the help of a personal loan you can afford to pay off your car loan faster. It decrease the amortization process because the interest rates are lower, and it will also have less impact on your budget since monthly payments are smaller.