Top 10 Ways To Avoid Missing Your Car Loan Repayments
Nobody enjoys paying a bill. Whether it be for your mobile phone, electricity or Netflix subscription, most of us just prefer to set up some direct debit billing so that the payments can look after themselves.
While the same can be said for car loan payments, they’re generally with us for a much longer time and can often be for significantly higher amounts of money. Car loans require some extra TLC, otherwise, it can be very easy to quickly fall behind.
To ensure you stay ahead of your car loan, here are our top ten tips on how to avoid missing your car loan repayments:
10. Create a realistic budget to ensure you aren’t stretching yourself too thin, and that you’re able to cover your repayments for the life of your loan.
9. Ideally, your vehicle expenses shouldn’t exceed 8-10% of your monthly income. If the monthly spend on your car (including your loan and other expenses such as insurance and petrol) is more than 8-10% of your monthly income, thoroughly examine your monthly expenses to see if anything can be cut back.
8. Try and line up your car loan repayments with your income to make the payments as stress-free as possible. This way, you may not even notice that they’re gone.
7. Explore your refinancing options if: interest rates from your lender have dropped or your credit rating has improved. You may be eligible for a better interest rate, which will make your repayments lower and much easier to manage.
6. Keep thorough details on your car loan progress to ensure you know exactly how much you’ve paid, and how much is owning. This will ensure you’re two-steps ahead of any future financial decisions.
5. Rounding up your repayments to the nearest $10, $50 or $100 (or whatever figure you’re comfortable with) is a great way to inch ahead of your car loan. If you’re ever having a slow month and things are a bit tight, being ahead of your repayments can give you some much-needed breathing room.
4. Know your car loan contract inside and out – if you’re ever in a situation where you think you will miss a repayment, ensure you know what late fees will be incurred so you can adequately budget for them.
3. Keep track of your balloon payment (if you have one). A balloon payment is like a reverse deposit. For example, if you’re borrowing $20,000, you might look at financing $15,000 over your 4 year loan with $5000 being your final payment. If this final payment isn’t to be refinanced and hasn’t been adequately budgeted for, it can easily be missed, putting you in a precarious financial position.
2. If you’re car loan becomes unaffordable, immediately seek a deferment. This will ensure your financier is aware of your financial troubles. If you’re granted the deferment, look explore long-term solutions such as refinancing or trading in your vehicle for a more affordable one.
And our number one tip on how to avoid missing your car loan repayments:
1. Ask for help. The importance of asking for help cannot be stressed enough. Whether it be your lender or your car loan broker, there are always people available to offer advice and guidance. Your lender would much rather you make your repayments than repossess your car, and if you’re honest and upfront with them about your financial situation they’ll certainly be willing to work with you in managing your loan.
If you require some more specific advice on managing your car loan repayments, the team at
Auto Car Loans are here to help. You can give us a call on 1300 301 051 or fill in the contact form on the website to get started.