Auto Loan Debt

If you have auto loan debt, you either have a loan with a financial institution or the dealer.  In either case, it’s important to know and understand the terms of this loan.

First, make sure you know:

• how much you have to pay,
• when the payment is due, and
• where to send the payment.

If your lender gave you a payment coupon book, use it.  The booklet contains a coupon for every payment you have to make.  Each month, tear off the coupon and send it with your payment to the address listed on the coupon itself.  It’s an easy way to keep up with your payments. 

Alternatively, most lenders and dealers have an online payment option. .  Or you can pay with automatic transfer or debit to the lender or dealer.  This can come from your savings account, checking account, or even your credit card.  If using your savings or checking account, make sure you have enough money in the account each month to cover the payment.

Second, understand what happens if you are late with or miss a payment.  Remember, that your automobile secures an auto loan.  This means your lender can repossess your car if you miss payments.  This can have negative consequences for you:

• No transportation, which could lead to complications getting to and from your job, school, childcare, or getting your children to school.
• A negative entry on each of your credit reports.
• Decrease in all of your credit scores.

Finally, if you are experiencing a hardship, contact the lender immediately.  See if you can set up a temporary plan to get through a hard month or two.  This can keep you from losing your car.