In this article we give some guidance on the options available to you to lessen the impact of the COVID-19 pandemic and manage auto loans during Coronavirus pandemic.

If you think you may fall behind on your auto loan, call your lender and explain your situation. The sooner you contact your lender, the more choices the lender may be able to offer you. And since it’s often more expensive for a lender to repossess your car than to work with you, your lender may be able to offer options that help you make your payments. Working with your lender also demonstrates a good-faith effort on your part to repay your debt.


You should know that there may be extra costs for the payment options that your lender offers. For example, all of the options discussed below will increase the amount of interest you pay over the life of the loan to varying degrees. Some options may increase your payment amount or the number of payments you owe. Learn more about the pros and cons of some of the options that may be available to you so that you can determine the best way to keep your car and manage auto loans during Coronavirus pandemic.

Option 1: Change your payment date

You probably arranged your date of payment to be after the date of your paycheque.  If circumstances have changed, ask your lender to change the date your payment is due.

Any small increase in the amount payable will be far less than being overdrawn at the bank!

Option 2: Request a payment plan

If you foresee a problem meeting your payments, or if you have already fallen behind in your payments, your lender may be able to offer you a “payment plan” to help you in the short term or to catch up and repay missed payments.

This is really only a short- term solution because when the payment plan ends you must start making payments again. You may be required to make your monthly payment as well as a portion of the payments you missed. Interest accrues daily on most contracts, so the amount of interest you owe between payments may change when you request a payment plan. Again, the additional cost may be good value if it enables you to keep your auto AND preserve your credit record.

Option 3: Ask for a payment extension/deferral

If you are unlucky enough to be experiencing financial hardship that is going to last longer than can be helped by the payment due to date change, i.e. your regular payment(s) consistently increase your indebtedness, and a payment plan is not the right solution, there is a further option.  You can ask your lender for a payment extension/deferral.

As the name suggests, the period of your loan may be extended. Payment extension plans vary by lender, and lenders have different criteria for evaluating your account. Some may limit the number of times you can defer payments. Some may not consider you qualified for an extension if you are behind on your payments.

You should talk to your lender and ask questions until you understand their requirements and they understand your needs.

In general, a payment extension allows you to defer a certain number of monthly payments — until a later date. This provides a brief break for borrowers suffering unexpected financial hardships or a natural disaster (COVID-19 for example).

In some cases, a lender may allow you to temporarily defer entire payments, while other lenders may only allow you to defer the principal portion of your monthly payment, but still require you to pay the interest each month during the payment extension.

A payment extension can help during a short-term hardship, but your loan will still accrue interest during the extension. A payment extension can significantly increase the amount of interest you owe and may also result in extra payments at the end of your loan term.  It may, however, provide a stable platform for your future financial planning.

Financial organizations and lenders in particular are instructed by the Consumer Financial Protection Bureau (CFPB) to take a constructive approach to consumer financial issues.  Remember too that lenders will be keen to retain your custom.

Option 4: Refinance your auto loan

When you took out your loan it was appropriate to your circumstances and the options available.  The circumstances and options have changed.

It is likely that your current lender will continue to offer you the best option available BUT you should review the alternatives.

The most obvious is to try to refinance through your current auto lender or another lender. You might be able to get a lower interest rate or a longer-term which would reduce the size of your payments.  Be aware that this may make your monthly outgoings more manageable but increase the total amount payable over the lifetime of the contract.


You should at least consider the option to trade-in your current auto for a more affordable one. If you sell or trade-in your current vehicle, its value, and how much you still owe will be an important factor in your decision.

Talk with your lender about the benefits and costs of each option and determine which one works best for your situation.

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