When to apply for car loan modifications

Posted in Car Loan Modification by admin

Getting a car loan modification is one of the many options you can choose to keep your car from being repossessed by banks and lending companies. The idea behind car loan modifications is easy to understand; it changes the agreements made when you applied for a car loan, making it easier for you to pay off the remaining loan balance. It’s a win-win situation for both the creditor and the borrower. The borrower gets to keep the car and the creditor will still have their money back (albeit a little later, or according to the new agreement).

A car loan modification can also save your credit rating from getting into the “red zone”. Should you fail to pay the loaned amount and the lending company repossesses your car, not only do you not get to keep the car, but you also suffer a penalty; a negative remark on your credit rating. A negative remark can make your future loan applications a little harder than before, as the lending companies might think twice on lending you money, for fear of them being scammed or you being a fraudulent person. Should they approve your loan application, they will implement more strict payment deadlines, and high interest rates to make sure that you pay back the loaned amount. Getting car loan modifications will save you from these problems in the future.

If you want to apply for a car loan modification, make sure that your lending company offers these loan modifications, as small companies usually don’t offer these modifications. Making a phone call to your lending company should suffice. If they are indeed offering such services, make sure that you bring the documents (e.g. resignation letter / lay-off letter) required to make an application for one. From there, the only thing you can do is wait and see if they will approve your application for one. Should they approve it, you will be given several options (e.g. extend terms, reduce payments by providing them with mortgage, etc.). After you pick one, they will let you know about the new terms of agreement, ask you if you agree with the new terms, and hopefully, reach a compromise between you and the creditor.

If you are facing problems with your current loan payments, you should phone your lending company right away to know more about car loan modifications. Doing so will let you keep your car, as well as keep your credit rating positive and free from negative remarks.