Different types of car loan modifications

Posted in Car Loan Modification by admin

Do you have problems regarding car loan payments? Are you falling behind on your loan payments? Feeling worried that your lending company might come and repossess your car? Do not fret, because there is another way you can keep your car even if you are late on your loan payments: get a car loan modification!

Car loan modifications enable you to pay off the remaining loan balance, without the lending companies having to repossess your vehicle. Even if your loan payments are behind by 2 to 3 months, they will not try and take your car, as long as you apply for a car loan modification.

The idea behind a car loan modification is rather simple; the lending company will let you keep your vehicle, and they will give you several new options of payment, modifying the terms made when you first applied for the car loan. Options include, term extension, payment reduction, and other types of loan modifications. For now let’s discuss the latter two types.

The first type of car loan modification is term extension. Term extension, as the name implies, extends the term on which you can pay off your remaining loan balance. For example, when you applied for a car loan, the original term was 2 years. If you apply for this type of loan modification, it can be extended to up to 3 or 4 years. However, extending the term also increases the loan interest, as they have lost some money from you. On the positive side, it is worth it as this means you get to keep your car for a few more months, as long as you pay on time.

The second type of car loan modification is payment reduction. If you have other items you don’t need that are of some value, you can use this as a mortgage payment. You can deduct several hundreds of dollars to your remaining loan balance if you “pay” with these items. However, the items you surrender should have some value. Also, the lending company or bank will still decide whether to take it or not, as they will need to sell it to gain profit. If they think they will have a hard time selling the item, they obviously won’t take it, as they won’t gain any profit but lose some more money from it.

There are other types of car loan modifications as well. You should call your lending company or bank to know more about the different types of car loan modifications.