Ways to Get Lenders to Work With You to Refinance a Vehicle for Financial Hardships

Keeping your car might require a lower monthly payment.

Keeping your car might require a lower monthly payment.

When you lose your job or are out of work for medical reasons, the financial hardship can be devastating. During any time of financial difficulty, making your car payment can become tougher each month. Refinancing your vehicle can result in a lower, more affordable payment. Start trying to refinance as soon as you begin having financial troubles, while your credit might still be good. This gives you a bit more bargaining power with the lenders.

Refinance for Lower Payment

Call your lender to see if the company refinances existing loans -- many companies don't, but that doesn't mean you're out of luck. Check with your bank or credit union about a refinance. Pull all your paperwork together, including check stubs or an explanation of why you're in financial hardship, such as if your hours were cut back at work. As long as you can prove that you still have enough income to make the new loan payment, it's likely you can refinance your car loan.

Loan Extension

If your financial hardship is likely to be temporary, such as an extended medical leave, ask your lender for a loan extension. Many lenders allow you to skip a certain number of payments, such as for six months, then they add those six months to the end of your loan term. You still pay the same vehicle payment, but you get a few months without a payment to help get your finances in order.


Finding a co-signer can help you refinance your vehicle if you don't have current proof of income, if you've been laid off, for example. A family member might be willing to co-sign with you to help you qualify for the refinance. The co-signer becomes liable for the loan if you don't pay, so only take this route if you're confident you can pay for the duration of the loan.


When you refinance, you trade a new car loan with a used car loan, which typically has a higher interest rate. The higher interest rate can result in a payment that's not as low as you'd like, unless you extend the payments for a long term. In this scenario, you end up paying significantly more for the car than you would by sticking with your original, new car, low-interest loan, but it could be your best bet to keep the car and prevent a repossession. If your car is upside down, which means you owe more than the car is worth, it could be difficult to get any kind of refinancing loan. In this case, it might be better to trade the car in on an inexpensive car that has a low enough price to shoulder the amount you are upside down. Talk to a car sales professional and your lender to see which option works best for your situation.

About the Author

Based outside Atlanta, Ga., Shala Munroe has been writing and copy editing since 1995. Beginning her career at newspapers such as the "Marietta Daily Journal" and the "Atlanta Business Chronicle," she most recently worked in communications and management for several nonprofit organizations before purchasing a flower shop in 2006. She earned a BA in communications from Jacksonville State University.

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