- It's in the lender's best interests to help customers keep their cars.
- Refinancing a car loan may help you avoid a negative credit rating.
- Provide the lender with information to buttress your hardship case.
There may be a light at the end of the recession tunnel, but millions of Americans still suffer stressed budgets due to job loss or underemployment. Those with unaffordable car payments may be eligible for a car loan refinance.
According to Thomas Webb, chief economist for a unit of Manheim, in Atlanta, 1.9 million vehicles were repossessed in 2009, an increase of 5 percent from 2008. That figure represents the highest number of repossessions since the organization began keeping track in 2001.
"As people continue to default on their auto loans. I think more banks and auto lenders will do more auto refinancing," says Robert Baker, director of education for Housing and
Credit Counseling Inc. in Lawrence, Kan. an agency of the National Foundation for Credit Counseling.
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A win-win situation
Many banks and auto lenders offer people relief on their auto loans by either extending the term of the loan or lowering the interest rate, both of which effectively lower the payment. "It's really in your best interest to keep your car and in the bank's best interest to keep people in their cars," says Mark Edelman, an attorney and partner in charge of McGlinchey Stafford, a law office in Cleveland, that represents banks that finance auto loans.
Baker says refinancing your auto, rather than allowing it to go past due or get repossessed, will help you avoid late fees and a possible negative credit rating. It also saves you from paying on a car you no longer possess.