June 17, 2009 • June Walbert
Q: Hello June, I have this problem and I really need some advice. The payment on my car was due plus I am behind for two months. Should I let them repossess the car instead of paying? Because I just started working, I won't be able to come up with the amount I owe. Please. I really need some advice. Thank you.
-Monica, San Diego, Calif.
A: I’m glad to hear you’re working—that’s a key first step! Congratulations! I know life can sometimes dog pile us, but we still must be financially responsible. After all, you’re likely going to want to borrow money again someday for another big purchase like a car or perhaps a house? But a question you really need to ask yourself is: Can I really afford that car? Sometimes it makes sense to “trade down” to a more affordable mode of transportation. I know that’s not easy, but reality can be tough – particularly if you owe more than it’s worth. If you’ve decided with your new income that you can indeed afford the car, then put on your big girl shoes and call the company/bank that has your car loan and talk with them. Explain that you’re interested in meeting your obligations, but that you just recently got a job. They’ll truly be happy for you as this is a tough job market! Ask if they’d be willing to negotiate your interest rate to lower the payment? Or might they be willing to recoup the missed payments over the next few months (and possibly without adding more dings to your credit report)? I’m sure they would rather work with you than repossess your car. Good luck!
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June Walbert is a CERTIFIED FINANCIAL PLANNER TM practitioner with USAA Financial Planning Services, one of the USAA family of companies.
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