What if I’m struggling to make my car finance payments?


If you’re struggling to make your car finance payments, don’t panic. In the event that you want to exit your agreement early, we will discuss a few options with you. However, each circumstance will vary, so make sure you do your research and always trust your lender. 

You might find these tips helpful if you can’t afford your car loan payments.

What if I can’t pay my car finance agreement?

You must speak with your lender as soon as possible if you’re struggling to make your car finance payments on your car finance agreement. You can try negotiating with them and see if they’ll agree to lower your monthly payments or even extend the length of time it takes for you to pay off your vehicle in full. Make sure you are honest with your lender about your situation since lenders will treat varying circumstances differently. 

If talking directly doesn’t work out then there are other options available. Remember that struggling to make payments for different types of car finance may work differently. So as always, get in touch with your lender to make sure. 

If my situation changes, what should I do?

You don’t have to panic if you’re unable to pay the car finance payments. Perhaps your lender may be able to help.

Here are some common examples of how circumstances can change:

  • You may experience financial hardship if you get married, divorced, or have a baby. It is always best to prepare for these eventualities ahead of time. However, you may not be able to anticipate these changes. So as soon as they happen, it’s best that you notify your lender.
  • What if something happens at work which means I’m earning less than before? Can I apply for hardship payments? It depends on whether this is an expected change or something unanticipated (like losing your job). When applying for a loan, find out what hardship policies the lenders have in place by asking directly or using a broker service. 

If you are struggling financially, it’s always best to get help from an expert. Make sure to check out Citizens Advice to get any further financial advice.

Other options to consider if you want to get out of your contract early

If you’re having trouble making your car finance payments, there are several options available to you. As long as you haven’t missed any payments and still have equity in the vehicle, you may be able to sell your car by coming to an agreement with your lender. However, if this is something you wish to do earlier in the contract, you may end up owing more money than you originally agreed with your lender. Which could put you into financial trouble. It’s best in this circumstance to discuss this with your lender and to research it before you make any decisions.

Another option is voluntary termination – if your financial situation has changed since you enrolled in finance or if you were made redundant, you might want to consider this option. This means you can give the car back without making any more payments, as long as you have paid 50% of your loan agreement. 

If none of these solutions work out for you then an alternative would be repaid through a payment holiday for car finance. Typically, you have a break in making payments for your financed car. However, once the payment holiday ends, the lender will recalculate your monthly payments to make up for the money you still owe.

You may be able to terminate the finance agreement and return the vehicle if you can’t afford your car payments

There are other options too, so if you’re struggling to make your car finance payments, don’t panic.

As discussed, you may be able to sell your car. You will need to discuss this with your lender before making any decisions. Even if you can’t do this until your last payment is made, you may be able to part-exchange your car for a cheaper model you can afford. It is important to note that when you part exchange during your agreement, you will typically have to repay your lender for what you still owe. You will typically receive the money that could be used as a deposit on another car.

By part exchanging your car earlier on in the contract, it will be worth less and you may still be in debt to the lender by a larger sum.

To conclude

We hope this guide has given you some clarity about the options available if you’re struggling to make your car finance payments. You may find that dealing with these situations is stressful. But don’t forget that you have people who can help. If you think your circumstances might change in the future and make it difficult for you to keep up with your repayments, then speak to us today about how we may be able to help. Equally, you may wish to contact your lender as soon as possible. Always make sure you do your research first before signing any car loan contracts.

Our team can scour the market to see what cars you will be able to afford. Or you can use our car finance calculator to see what options are available to you, should you apply for car finance with us. Contact us for more information!