Compare legitimate car payment relief programs vs. scams to avoid repossession

When you're struggling to make your car payment, you'll find no shortage of companies and programs claiming they can help. Some are legitimate and can genuinely provide relief. Others are scams designed to take your money or make your situation worse.

This guide cuts through the noise and shows you which car payment relief options actually work, which ones to approach with caution, and which to avoid entirely.

Legitimate Lender-Based Relief Programs

The best and safest relief options come directly from your auto lender. These programs exist specifically to help struggling borrowers avoid default and repossession.

Auto Loan Hardship Programs

What They Are: Formal programs offered by most major lenders that provide temporary payment relief to borrowers experiencing financial hardship.

How They Work: You contact your lender, explain your situation, and provide documentation of your hardship. If approved, they may offer payment deferral, payment reduction, loan extension, or interest rate reduction.

Who Offers Them: Most major lenders including Ally Financial, Capital One Auto Finance, Wells Fargo, Chase Auto, and credit unions.

Cost: Free—you work directly with your lender

Legitimacy: ✅ Highly legitimate and recommended as your first option

Pros:

• Free to apply
• No third parties involved
• Designed specifically for temporary hardship
• Can prevent repossession and protect your credit

Cons:

• Approval not guaranteed
• May extend your loan term and increase total interest paid
• Requires documentation of hardship

Learn more about these programs in our detailed guide on auto loan hardship programs.

COVID-19 and Disaster Relief Programs

What They Are: Special relief programs created in response to specific crises, such as the COVID-19 pandemic, natural disasters, or economic downturns.

How They Work: Lenders temporarily expand their hardship programs during major crises to help affected borrowers. These often include extended deferral periods, waived late fees, and relaxed documentation requirements.

Who Offers Them: Major banks, credit unions, and auto finance companies during declared emergencies or natural disasters.

Cost: Free

Legitimacy: ✅ Legitimate when offered directly by your lender

Pros:

• More generous than standard hardship programs
• Easier qualification requirements
• May include fee waivers and extended deferral periods

Cons:

• Only available during specific crisis periods
• Time-limited—you must apply during the designated relief period
• Still extends your loan term

Current Status: As of October 2025, most COVID-19 specific programs have ended, but lenders still offer standard hardship assistance. After natural disasters, regional relief programs may be available—check with your lender if you're in an affected area.

Loan Modification Programs

What They Are: Permanent changes to your loan terms designed to make your payment more affordable long-term.

How They Work: Your lender agrees to modify your existing loan by reducing your interest rate, extending the term, or (rarely) reducing the principal balance.

Who Offers Them: Banks, credit unions, and auto finance companies—typically for borrowers with significant hardship who have been good customers.

Cost: Free to low cost (may include an administrative fee)

Legitimacy: ✅ Legitimate when done directly with your lender

Pros:

• Permanent solution, not temporary
• Can significantly reduce your monthly payment
• Avoids need for refinancing and credit check

Cons:

• Not all lenders offer this
• May require extensive hardship documentation
• Usually extends loan term and increases total cost

What to Ask: "Do you offer loan modification programs for borrowers experiencing financial hardship?"

For more specific options, see our article on help with car payments.

Legitimate Third-Party Relief Options

Some organizations outside your lender can legitimately help with car payment relief. Here are the trustworthy ones:

Nonprofit Credit Counseling Agencies

What They Are: IRS-approved nonprofit organizations that provide free or low-cost financial counseling and can sometimes negotiate with creditors on your behalf.

How They Work: You schedule a session with a certified credit counselor who reviews your complete financial situation. They may help you create a budget, suggest options, or in some cases contact your lender to negotiate on your behalf.

Who Offers Them: Look for agencies certified by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

Cost: Usually free or very low cost ($0-$50)

Legitimacy: ✅ Legitimate—but verify nonprofit status and NFCC/FCAA certification

Pros:

• Professional guidance from certified counselors
• Free or very low cost
• Can help you see options you might miss
• May negotiate on your behalf

Cons:

• Cannot guarantee lender will agree to help
• Focused on budgeting and planning more than immediate relief
• Won't provide cash or pay your bill for you

How to Find One: Visit NFCC.org or call 800-388-2227

Government Assistance Programs (Limited)

What They Are: Federal, state, or local programs that provide financial assistance to low-income individuals, sometimes including help with transportation expenses.

How They Work: Eligibility is typically based on income level and specific circumstances (e.g., veterans, disabled individuals, families with children).

Who Offers Them: Programs vary by location but may include:

• Temporary Assistance for Needy Families (TANF)
• Community Action Agencies
• Veterans assistance programs
• State emergency assistance funds

Cost: Free

Legitimacy: ✅ Legitimate government programs

Pros:

• Free assistance
• Don't need to repay
• May help with multiple expenses, not just car payments

Cons:

• Strict eligibility requirements
• Usually limited to very low-income households
• Often have long waiting lists
• May only provide one-time assistance

Reality Check: Most government programs don't directly pay car loans. They may help with other expenses (food, utilities), which frees up money for your car payment, or provide transportation assistance through other means (bus passes, rideshare vouchers).

Refinancing With a Different Lender

What It Is: Taking out a new auto loan with a different lender to pay off your current loan, ideally at a lower interest rate or with a longer term that reduces your payment.

How It Works: You apply with banks, credit unions, or online auto lenders. If approved, they pay off your existing loan and you make payments to the new lender under the new terms.

Who Offers It: Credit unions, banks, online lenders like LightStream, Auto Approve, or Refinance.com

Cost: Usually free (no upfront fees), but shop carefully as some lenders charge origination or application fees

Legitimacy: ✅ Legitimate—but shop carefully and read all terms

Pros:

• Can significantly lower your interest rate if your credit has improved
• Can reduce monthly payment by extending term
• Switches you to a lender who may be easier to work with
• You control the timing and terms

Cons:

• Requires credit check (may temporarily lower score)
• Need decent credit to qualify for good rates
• If you extend the term, you'll pay more interest over time
• Your car must meet lender's age and mileage requirements

Best For: Borrowers who have improved their credit since taking out their original loan, or those with high-interest rates who can qualify for better terms.

Approach With Caution: Debt Relief and Settlement Companies

These companies operate in a gray area. Some are legitimate, but many use aggressive sales tactics and may not deliver what they promise.

Debt Settlement Companies

What They Claim: "We'll negotiate with your lender to reduce your car loan balance by 50% or more!"

How They Actually Work: You stop making payments to your lender and instead pay the settlement company. They let your loan go into default, then negotiate a settlement with your lender for less than you owe.

Cost: Typically 15-25% of your enrolled debt, or a percentage of the "savings" they achieve

Legitimacy: ⚠️ Legally operating, but high risk and often not worth it

Pros:

• May reduce your total debt if they successfully negotiate
• Handles negotiation for you

Cons:

• Your loan goes into severe default
• Your car will likely be repossessed before settlement
• Destroys your credit score
• You pay high fees for something you could try yourself
• No guarantee of success
• If debt is forgiven, you may owe taxes on it

Reality Check: Auto loans are secured debt (backed by the car). Lenders will almost always repossess before they settle for less. Debt settlement works better for unsecured debt like credit cards. For auto loans, it rarely succeeds and often makes things worse.

Debt Consolidation Companies

What They Claim: "Combine all your debts into one lower monthly payment!"

How They Work: Legitimate debt consolidation works two ways: (1) You take out a personal loan to pay off multiple debts, or (2) You enroll in a debt management plan through a credit counseling agency.

Cost: Varies—personal loans have interest, debt management plans charge small monthly fees ($25-$50)

Legitimacy: ⚠️ Legitimate if done through verified lenders or nonprofit credit counselors; scam if through unverified "debt relief" companies

Pros:

• Can simplify multiple debts into one payment
• May lower overall monthly payment
• If through credit counseling, may include negotiated interest rate reductions

Cons:

• Personal loan may have high interest if your credit is poor
• Often involves longer terms, meaning more interest over time
• For-profit debt relief companies may charge high fees
• Doesn't actually reduce what you owe

How to Do It Right:

• For personal loans: Shop with credit unions and reputable online lenders
• For debt management plans: Only work with NFCC-certified credit counseling agencies
• Avoid companies that charge large upfront fees or make unrealistic promises

Complete Scams: Avoid These Entirely

Some "relief" options are outright scams or so predatory that they'll make your situation much worse.

Payday Loans and Title Loans

What They Are: Short-term, high-interest loans often marketed to people in financial distress.

Why They're Terrible:

• Payday Loans: Annual interest rates of 300-400% or higher
• Title Loans: You put your car title up as collateral and can lose your car if you don't repay (often within 30 days)
• Both trap you in a cycle of debt

Legitimacy: 🚫 Legal but extremely predatory—avoid at all costs

Reality Check: Using a payday loan to make your car payment means you'll struggle even more next month when the payday loan is due. Title loans risk losing your car even faster than missing your regular payment would.

Advance-Fee Loan Scams

What They Are: Companies that promise to get you a loan or relief but require you to pay a fee upfront before they do anything.

Red Flags:

• "Guaranteed approval—just pay $500 processing fee first"
• "We can get you a loan regardless of your credit"
• Request payment via gift card, wire transfer, or cryptocurrency
• No physical address or license information

Legitimacy: 🚫 Complete scam

Why They're Scams: Legitimate lenders never ask for money before approving a loan. Once you pay the fee, they disappear and provide nothing.

What to Do: Report these companies to the FTC at ReportFraud.ftc.gov.

Fake Hardship Program "Specialists"

What They Are: Companies that claim to be specialists in getting you into auto loan hardship programs, often charging hundreds or thousands of dollars.

Why They're Scams: You can contact your lender directly and apply for hardship programs yourself, for free. These companies provide no value and often just take your money without helping.

Red Flags:

• Charge upfront fees of $500-$2,000
• Claim they have "special relationships" with lenders
• Guarantee approval
• Pressure you to sign up immediately

Legitimacy: 🚫 Scam or unnecessary middleman charging for free services

What to Do Instead: Call your lender directly and ask about hardship programs. It's free and you don't need anyone's help to do it.

"We Buy Car Payments" Companies

What They Are: Companies that offer to "take over" your car payments in exchange for transferring the title to them.

Why They're Bad: You lose your car but remain legally liable for the loan if they stop making payments. They often resell the car, keep the profit, and leave you on the hook for the remaining loan balance.

Legitimacy: 🚫 Legal but extremely predatory

What to Do Instead: If you can't afford your car, sell it yourself through a private sale or trade it in at a dealer. You'll get more money and avoid getting scammed.

How to Evaluate Any Relief Offer

Before signing up for any car payment relief program, ask yourself these questions:

1. Is this directly from my lender? If yes, it's probably legitimate. If no, be cautious.

2. Do they charge upfront fees? Legitimate relief programs don't charge money before helping you.

3. Are they asking me to stop paying my lender? Any program that tells you to stop paying your lender (except bankruptcy) is likely a scam or will lead to repossession.

4. Can I verify they're legitimate? Check the Better Business Bureau, state attorney general's office, or the NFCC database.

5. Do they guarantee results? No one can guarantee your lender will approve assistance. Be wary of promises that sound too good to be true.

6. Are they pressuring me? Scammers use high-pressure tactics. Legitimate organizations give you time to think and research.

7. Do they have a physical address and license? Real companies have verifiable business addresses and are licensed in your state if required.

Your Best Path Forward

For most people struggling with car payments, the best path is:

Step 1: Contact your lender directly and ask about hardship programs or payment options. This is free and should always be your first step.

Step 2: If your lender can't help enough, consult a nonprofit credit counselor for professional guidance at little to no cost.

Step 3: Consider refinancing with a different lender if you have decent credit and can qualify for better terms.

Step 4: If none of these work and you have multiple debts, consider whether bankruptcy might be appropriate. Consult with a bankruptcy attorney (most offer free consultations).

Step 5: If you truly can't afford the car anymore, consider selling it yourself or voluntary surrender to minimize the financial damage.

For more detailed guidance on working with your lender, read our comprehensive guide on how to stop car repossession.

Red Flag Checklist

Avoid any company or program that:

• ✗ Requires large upfront fees
• ✗ Guarantees loan approval or debt elimination
• ✗ Tells you to stop paying your lender
• ✗ Requests payment via gift cards, wire transfer, or crypto
• ✗ Won't provide written information or a contract
• ✗ Pressures you to decide immediately
• ✗ Has no physical address or verifiable license
• ✗ Has numerous complaints with the Better Business Bureau or state AG
• ✗ Claims to be affiliated with the government but isn't

If you encounter any of these red flags, walk away and report the company to the FTC and your state attorney general.

Take Action With Confidence

Now that you know which relief options are legitimate and which are scams, you can move forward with confidence. Remember:

• Your lender's hardship programs are almost always your best first option
• Nonprofit credit counselors can provide valuable guidance
• Refinancing may help if you have decent credit
• Avoid anyone charging upfront fees or making unrealistic promises
• When in doubt, research the company thoroughly before providing any money or information

You have real options available. Don't let desperation drive you into a scam that makes your situation worse.

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Free Tools to Help You Keep Your Car

• Repo Countdown Tool – See how much time you have before repossession becomes likely
• Hardship Letter Generator – Create a professional letter to request help from your lender
• Debt Relief Quiz – Get personalized recommendations based on your situation

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