Posted and up-to-date as of 12/15/2020
I can’t make my auto loan payment because I have been affected by the COVID-19 outbreak. What should I do?
Contact your finance company! Many car finance companies are offering special programs to help peopled impacted by the outbreak, or expect they will be affected. The programs vary from company to company, but many include the option to put off or 'defer' your payments for between 90 and 120 days. Many also include a hold on reporting missed or late payments to credit reporting agencies.
It is very important that you contact your finance company before you miss a payment. Most of these programs are not automatic - you have to contact your lender to set them up.
What does it mean to have my car loan payments 'deferred?'
Having your payments deferred really just means you are putting those payments off. The idea is that even if you can't pay now because of the current emergency, you will be able to pay in the future. There are a few important things to know about deferrment:
- It is likely that your loan will continue generating interest. This means you will end up paying a higher finance charge over the life of your loan.
- The payments you skip now will have to be paid back later, along with this additional interest. This can be done a few ways - either by extending the term of your loan or by having a lump sum payment due at the end of your original term, depending on the program offered by your finance company.
I heard that repossessions have been suspended. Is this true in Maine?
No. There is no specific ban on repossession activity by finance companies in Maine at this time. There is no federal ban either. But, regulations are changing quickly and it is unclear if repossession is considered an 'essential business' under current Maine regulations. Some important things to know:
- Even though the courts are closed to most non-emergency actions in Maine, court action is not needed to reposses a car.
- If you are worried your car may be repossessed due to the effect of the COVID-19 outbreak, remember that your finance company may be offering special programs to defer payments on your loan.
- If you get a Notice to Cure, the first step in the repossession process, you should contact a lawyer immediately.
I have lost my job and I cannot afford my car payments. Can I give the car back to the finance company?
Voluntarily surrendering a car is an option. But it is very important to remember that even if you give the car back, the finance company may still come after you for a 'deficiency' on the car. A 'deficiency' is the difference between what is owed on the car loan account and what the finance company sells the care for once you give it back. These deficiencies can be very high.
If you can sell the car for more than what you owe on it, this may be your best choice. But, if you are “underwater,” meaning that you owe more on the car than it is worth, and wish to voluntarily surrender the car, you should talk with an attorney who may be able to negotiate for a better deal on your behalf.