There are now several types of loans to help households finance different projects: home loans, consumer credit, car loans and many others. However, in order to avoid the risk of over-indebtedness, transactions such as the repurchase of credit or the renegotiation of monthly payments are possible.
The monthly payments of your car loan begin to weigh on your monthly income? To avoid any risk of future default or over-indebtedness, you can renegotiate your monthly payments.
About the car loan
The car loan is a personal loan for the purchase of a new or used vehicle. To qualify for this type of credit, you must apply to a financial institution such as a bank or a specialized credit company. However, some dealers also offer their customers a car loan.
The car loan is subject to a regulation similar to that of consumer credit. You want to buy a new car, but your budget management does not allow it? Contract a car loan is a solution. Indeed, a personal contribution from you is not required.
Being an assigned loan, the car loan must be used solely to finance the acquisition of a car. Its rate is variable according to several criteria, including: the amount requested, the duration of repayment and the type of car purchased (new or used).
Opting for a short credit period is a way to benefit from a lower rate and therefore lower monthly payments. Subscription to a car loan is easy and can be done on the Internet. The use of a broker is a solution that can help make the right decisions.
Different events can impact your income and, as a result, influence your ability to pay monthly loan payments. Renegotiation is required. How to proceed?
How to negotiate repayment terms?
The renegotiation of the monthly payments of a credit is an advantageous solution to reduce your monthly expenses and to avoid a situation of overindebtedness. However, it is subject to some conditions.
If it can be simple for the case of a mortgage, it is not simple for a car loan. Thus, if a borrower has financial difficulties, he is often oriented towards restructuring the monthly payments of his auto loan.
Indeed, in principle, being in the class of consumer credit, auto credit is non-negotiable. The repayment period stipulated in the subscription must therefore be respected. As a result, the only loan renegotiation options are covered by the terms of the contract.
Before ending up in default, the most appropriate solution should be found. To do this, the first reflex is to know the terms of the contract. Indeed, certain clauses can play in your favor.
A moderation of repayments is sometimes allowed for home loans, consumer loans and car loans. It can appear in different forms, such as prorogation or reduction of monthly payments. However, there are other possibilities.
Replaying the contract may be useful for identifying favorable clauses. Then, getting in touch with the financial institution that gave you the loan allows you to express your desire to renegotiate the terms of repayment of your credit.
This type of approach often makes it possible to find a solution such as the postponement of one or more monthly payments, in the case of a punctual problem impacting your finances.
Flexibility on monthly payments, if a clause of the contract allows it
Before subscribing to a car loan, it is advisable to choose a contract that allows renegotiation of monthly payments. Thus, if necessary, you can later ask for a reduction in the monthly payment over a given period.
There are financial institutions that offer discounts of up to 20%. In general, most banks that offer this form of flexibility allow a reduction from 5%, which is already interesting in case of unforeseen events. A depreciation schedule will help you estimate your benefits.
Postponement of payment authorized by the initial contract
Do you have temporary difficulties managing your budget, following a case such as a job loss, illness or other? Instead of waiting for the consequences of a payment default, it is better to contact your credit agency.
You must be honest and explain your situation. A suitable solution for both parties (the bank and you) can be found. If you have a car credit agreement authorizing a deferral of payment, you can submit this option.
What to do in case of unsuccessful negotiations with the bank?
If your contract does not guarantee you any alternative to your advantage and your bank reconciliation initiative is unsatisfactory, you should consider other alternatives. Some borrowers choose a spot overdraft or a loan redemption, depending on their situation.
In the worst case, you can request the intervention of the magistrate of your home. The latter has the qualifications to obtain you a postponement or a rescheduling of the repayment of your loans, according to the provisions of article 1244-1 of the Civil Code.
If you have several loans in progress, you can reduce the total amount of your monthly payments by opting for a loan consolidation. This is an operation that consists of collecting several types of loans, including auto loans, in one, from a single financial institution. This allows you to lower your debt ratio.
The amount of the monthly payments will be more adapted to your incomes, but the duration of repayment will be longer. If a mortgage represents the equivalent or more than 60% of debts, you can enjoy a preferential rate. In addition, the regulations in effect for this loan category will be applied for your pooled credit agreement.