Prepare to apply for a loan modification by gathering the necessary paperwork and doing the math on the exact details of your financial situation. Even if you cannot make the payments in full, pay what you can and document everything, so you can present the information as evidence later on. Note: You must keep paying the loan while applying for the loan modification.Remember, a loan modification is not a refinance, but rather simply a reduction of payments, so that you can keep making them regularly under financial stress. Step 2: Remember the facts.You do still need to keep some things in check while making the decision, since you need to be approved by the lender to receive a loan modification. If it is at all avoidable, then attempt to remedy the issue without a modification, which is a change in the terms of the loan agreement, resulting in a more affordable rate.
Figure out if a loan modification is the right thing for your situation. Part 1 of 1: Acquire the loan modification In this case, the only course of action is a loan modification. Similarly, if you do not have a good credit score, then you may not be able to refinance the loan. If the value of your car is less than the amount of money owed, then you are upside-down on the loan, and selling the car will not erase the debt. These are not, however, options available to everyone. This happens to many car owners, and the usual course of action is either to sell the car in order to pay off the loan, or refinance to adjust the terms of the loan, making the payments more manageable. A person’s financial situation can change while they are paying off a car loan, and if it changes for the worse, then it will be difficult to make the payments on time each month.
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