Struggling with car payments? Discover six proven ways to get temporary relief, reduce your monthly payment, or avoid default with your lender

If you're struggling to make your car payment, you're not alone—and you have more options than you might think. Many people assume that missing a payment means automatic repossession, but that's rarely the case. Most lenders would rather work with you than repossess your vehicle, which costs them time and money.

The key is knowing what to ask for and how to ask for it. This guide walks you through six real, proven options you can request from your lender right now to get help with your car payments.

Why Lenders Want to Help You

Before we dive into specific options, it's important to understand why lenders are often willing to work with struggling borrowers. Repossession is expensive for them. They have to:

• Pay a repo agent ($200-$500)
• Store and maintain the vehicle
• Prepare it for auction
• Sell it at auction (usually for less than retail value)
• Deal with the administrative costs and paperwork

In many cases, they'll recover less than what you owe, and they'll have to chase you for the deficiency balance. It's a lose-lose situation. That's why most major lenders have loss mitigation departments specifically designed to help borrowers avoid default.

The earlier you reach out, the more options you'll have. Don't wait until you're three months behind—call your lender the moment you know you'll have trouble making your next payment.

Option 1: Payment Deferral (Skipping 1-3 Payments)

What It Is: Payment deferral, sometimes called forbearance, allows you to skip one to three monthly payments. Those missed payments are moved to the end of your loan term, and you resume regular payments after the deferral period ends.

Best For: Short-term cash flow problems, like a temporary layoff, unexpected medical bill, or seasonal income gap.

How It Works:

• You contact your lender and request a deferral
• They agree to let you skip 1-3 payments
• Interest continues to accrue during the deferral period
• Your loan term extends by the number of months deferred
• You resume normal payments after the deferral ends

Example: You owe $350/month with 36 months left. You defer two payments. You now have 38 months left on your loan, and you start paying $350 again in month 3.

Pros:

• Immediate relief—no payment due for 1-3 months
• Helps if you're waiting on income (new job, insurance claim, etc.)
• Usually doesn't require extensive documentation

Cons:

• You'll pay more interest overall
• Extends your loan term
• May be reported to credit bureaus as modified or deferred

What to Say: "I'm experiencing a temporary financial hardship due to [reason]. Can I defer my next two payments to the end of my loan term?"

For more details on how forbearance works, read our article on car loan forbearance.

Option 2: Loan Extension (Stretching Your Loan)

What It Is: Your lender agrees to extend the total length of your loan, which permanently reduces your monthly payment amount.

Best For: Long-term income reduction where you can afford a smaller payment but not your current one.

How It Works:

• Your lender recalculates your loan with a longer term
• Your monthly payment decreases
• You pay more interest over the life of the loan
• This is a permanent modification, not temporary

Example: You have 24 months left at $400/month. Your lender extends it to 36 months, reducing your payment to $280/month.

Pros:

• Lower monthly payment permanently
• Can make your payment manageable long-term
• Keeps you out of default

Cons:

• You'll pay significantly more interest
• Increases the total amount you'll pay for the car
• May require a loan modification application

What to Say: "I've had a permanent income reduction and can no longer afford my current payment. Can we extend my loan term to reduce my monthly payment?"

This option works best if you've experienced a permanent change in income but still have stable employment. It's different from deferral because the payment reduction is ongoing, not just temporary.

Option 3: Interest Rate Reduction

What It Is: Your lender temporarily or permanently lowers your interest rate, which reduces both your monthly payment and the total amount you'll pay over time.

Best For: Borrowers with improved credit scores since taking out the loan, or those experiencing hardship with good payment history.

How It Works:

• You request a rate review or modification
• The lender evaluates your payment history and credit
• If approved, they lower your rate (typically by 1-3 percentage points)
• Your monthly payment decreases

Example: You have a 12% APR with $325/month payment. Lender reduces it to 9% APR, dropping your payment to $295/month.

Pros:

• Saves money both monthly and over the life of the loan
• No downside if approved
• Can be permanent

Cons:

• Not all lenders offer this
• May require good credit and payment history
• Often requires refinancing paperwork

What to Say: "I've been a good customer for [X] years and my credit has improved. Can you review my interest rate and see if I qualify for a reduction?"

Pro Tip: If your current lender won't lower your rate, consider refinancing with a different lender. Shop around with credit unions and online lenders—they often offer lower rates than traditional banks.

Option 4: Payment Reduction Plan (Temporary Lower Payments)

What It Is: Your lender temporarily reduces your monthly payment amount for 3-6 months, then you return to regular payments.

Best For: Predictable temporary hardship, like recovering from surgery, waiting for a new job to start, or handling a short-term financial crisis.

How It Works:

• You request a temporary payment reduction
• Lender agrees to accept lower payments for a set period
• The difference is either added to your loan balance or due when regular payments resume
• After the reduction period, you return to full payments

Example: Your payment is $375. Lender agrees to accept $200 for three months. The $525 difference ($175 × 3) is added to your balance or due as a lump sum later.

Pros:

• Makes payments manageable during crisis
• You maintain payment history
• Typically easier to budget than skipping payments entirely

Cons:

• You'll owe the difference later
• Not as common as deferral
• May still affect your credit rating

What to Say: "I'm going through a temporary hardship and need to reduce my payment for three months. Can we arrange a temporary payment reduction with the difference added to my balance?"

This option is excellent if you have some money coming in but not enough to cover your full payment. For more options like this, see our guide on car payment relief options.

Option 5: Principal Balance Reduction (Rare But Possible)

What It Is: Your lender agrees to forgive a portion of your loan principal, reducing both your balance and your monthly payment.

Best For: Severe hardship cases, especially if you're already significantly behind and repossession is imminent.

How It Works:

• You demonstrate extreme financial hardship
• Lender determines that reducing your principal is better than repossessing
• They forgive part of your balance
• Your monthly payment or loan term is adjusted accordingly

Example: You owe $18,000 with $450/month payments but can only afford $300. Lender forgives $5,000 of principal, reducing your balance to $13,000 and payments to $300.

Pros:

• Significant reduction in what you owe
• Makes loan affordable when nothing else works
• Avoids repossession

Cons:

• Extremely rare—lenders almost never do this
• May have tax consequences (forgiven debt = taxable income)
• Will significantly impact your credit
• Requires extreme documented hardship

What to Say: "I'm facing [bankruptcy/severe hardship] and cannot afford my current loan balance. Rather than let this go to repossession, would you consider a principal reduction to an amount I can afford?"

Reality Check: This option is very uncommon and usually only happens when repossession is imminent and the lender calculates they'd lose more at auction than by reducing your balance. Don't count on this, but it doesn't hurt to ask if you're in dire straits.

Option 6: Payment Plan for Past-Due Amounts

What It Is: If you're already behind, your lender may let you catch up gradually by adding extra to each regular payment instead of demanding a lump sum.

Best For: Borrowers who missed 1-3 payments but can now afford regular payments plus a little extra.

How It Works:

• You've missed payments and are behind
• Instead of paying all past-due amounts immediately, you negotiate a plan
• You resume regular monthly payments plus an additional amount
• After several months, you're caught up

Example: You missed two $300 payments and owe $600. Lender agrees to let you pay $350/month for 12 months instead of demanding $600 immediately.

Pros:

• Avoids need for lump sum payment
• Gets you back on track gradually
• Stops collection calls and repossession risk

Cons:

• Higher monthly payment during catch-up period
• You're still behind until the plan is complete
• May be reported as "payment arrangement" on credit report

What to Say: "I fell behind on my payments due to [reason], but I'm back on my feet now. Can we set up a payment plan where I pay a little extra each month to catch up instead of paying the full past-due amount at once?"

This is one of the most realistic options if you've already missed payments. Most lenders prefer to get you back on track rather than repossess, especially if you can demonstrate your hardship is resolved. Learn more about your rights in this situation in our guide on stopping repossession after missed payments.

How to Approach Your Lender

Now that you know what options exist, here's how to successfully request help:

Before You Call

Document Your Hardship: Gather proof of your situation—layoff notice, medical bills, bank statements showing reduced income, etc.

Know Your Numbers: Have your loan account number, current balance, payment amount, and due date ready.

Review Your Budget: Be ready to explain your current income and expenses, and what you can realistically afford.

Choose Your Request: Based on your situation, decide which of the six options above makes the most sense for you.

During the Call

Be Honest and Direct: Explain exactly what happened and why you need help. Don't exaggerate, but don't downplay your situation either.

Ask Specific Questions: Don't just say "I need help." Say "Can I defer two payments?" or "Can we extend my loan term to reduce my payment?"

Take Notes: Write down the name of the person you speak with, the date, time, and what was discussed.

Get It in Writing: If they agree to help, ask them to email or mail you written confirmation of the arrangement.

Follow Up: If they say they'll call you back, set a reminder to follow up in 3-5 business days if you don't hear from them.

Sample Script

"Hi, my name is [Your Name] and my account number is [Number]. I'm calling because I'm experiencing a financial hardship due to [reason]. I've been a good customer for [X] years and have always paid on time until now. I'm worried about falling behind and want to work out a solution. I can afford [amount] per month right now. Do you offer [specific option like payment deferral] that could help me through this situation?"

Use our Hardship Letter Generator to create a professional written request to accompany your phone call.

What If Your Lender Says No?

Sometimes your first request is denied. Here's what to do:

Ask Why: Understanding the reason helps you address it. Maybe you need more documentation, or you need to try a different option.

Request a Supervisor: Sometimes a manager has more authority to approve assistance than frontline customer service.

Try a Different Option: If they won't defer payments, ask about a payment plan or loan extension instead.

Look into Refinancing: If your current lender won't help, see if you can refinance with a different lender who offers better terms.

Consult a Credit Counselor: Nonprofit credit counseling agencies can sometimes negotiate on your behalf for free.

Consider Other Options: Selling the car, voluntary surrender, or as a last resort, bankruptcy may be necessary if you truly can't afford the vehicle.

For a comprehensive look at all your options, read our complete guide on how to stop car repossession.

Red Flags: What to Avoid

Payday Loans: Never take out a payday loan or title loan to make your car payment. These predatory loans will make your situation worse.

Ignoring the Problem: Hoping it goes away won't work. The longer you wait, the fewer options you'll have.

Third-Party "Helper" Companies: Be wary of companies charging fees to negotiate with your lender. You can do this yourself for free.

Making Partial Payments Without Approval: Don't just send less than your full payment. Many lenders will reject partial payments or still count you as late. Get approval first.

Take Action Today

If you're struggling with car payments, the worst thing you can do is nothing. Lenders are far more willing to work with borrowers who are proactive and communicate openly.

Start by choosing which of the six options above best fits your situation, then call your lender today. Be honest, be prepared, and be persistent. Most people who genuinely try to work with their lender find a solution that helps them keep their car.

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Free Tools to Help You Keep Your Car

• Repo Countdown Tool – Calculate how much time you have before repossession risk increases
• Hardship Letter Generator – Create a professional hardship letter to send your lender
• Debt Relief Quiz – Get personalized recommendations for your financial situation

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