| Hi Taylor
- My husband and I are in a bit of bind. He recently got laid off
and is receiving unemployment, but he has a $700/mo car payment that
we can no longer afford. What are our options? We don't want to have
the car repossessed and take a credit hit (his credit is already subpar),
but I don't know how we can cover the payments. - Tracy
Hi Tracy - So sorry to hear about the situation. These unforeseen
financial problems can really be the pits.
You should, of course, do your best to avoid defaulting. You certainly
don't want to take on another loan that might make the situation worse.
There's also the question of transportation - could the lack of transportation
prevent your husband from making his scheduled job interviews?
There's a possibility that you'll be able to rework the terms of the
loan. Your best bet is to work with the lender and/or dealership;
it's not in anyone's interest for your husband to stop making payments
and take a hit on his credit score. If your husband can make some
form of monthly payment until he gets back to work, you might be able
to refinance and get terms that will help you avoid creditors. The
only way to find out is by asking your lender.
Another option would be to trade this car in for a cheaper model.
If that's a possibility, it would certainly be preferable to losing
the car and taking a hit on your credit score. Most dealerships will
allow for that type of trade, assuming the vehicle is in good shape
and still under some type of warranty.
The steps you take depend in large part on your current financial
situation and prioritizing your expenses. If you have a budget, plug
in your numbers for each outcome to determine which decision is better
for you. Your husband may be eligible to receive additional unemployment
benefits. If he is, then add this income to your budget to see whether
you can still afford your car or if you should reallocate his benefits
to other categories.
Keep your head up and investigate all your options. Ask for advice
from friends, family and on forums like this one. There's no easy
answer I can give right now, but if you put in the effort and exhaust
all options, things will be okay.
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.