Auto Loans
Overview
Most auto loans involve credit you used to purchase a vehicle. You may also have
taken out a title loan on a vehicle you owned. Are you having trouble making payments
on your auto loan? Read below to learn more about your rights and COVID-19-related
resources.
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What happens if you cannot make payments on your car loan?
If you stop making payments, the lender that has a lien on your automobile may declare
you in “default” on your loan. Generally, if you do not make a payment within a
certain time after a payment is due, you will be considered in default. Also, a
common default condition is not maintaining the required insurance. Read your credit
contract to determine what default conditions apply to you.
Once you’re in default, the owner of the loan may “accelerate” the credit contract,
which means the owner can tell you that you must pay the entire loan. If you do
not do so, then the owner of the loan may seek to repossess your car and sell it
in order to cover the balance owed on the loan. Each state has its own laws about
when the account can be accelerated, and what notices, if any, must be sent. Generally,
at minimum you must be given a notice of sale before the owner of the loan that
has repossessed your vehicle can sell it, so you have an opportunity pay off the
loan and get your vehicle back. If you do not pay off the loan and your car is sold,
you should also receive a notice regarding how much the vehicle was sold for and
any charges associated with the repossession and sale. Any money left on the loan
balance that the money from the sale of the vehicle does not cover is called a “deficiency
balance.” Check your state’s laws regarding what protections are available to you
in such situations.
The other danger you face if your auto lender places your loan in “default” is damage
to your credit report. See Protecting Your Credit
Some states have taken action to prohibit repossessions and even debt collection
during this crisis. For example, in Illinois, the governor has issued
Governor’s Executive Order 2020-16 which prohibits
self-help repossessions from March 27, 2020 through the end of the declared emergency.
And in Massachusetts: the attorney general
issued emergency regulation
940 C.M.R. 35.00 which will apply for 90 days or when the state
of emergency expires, whichever comes first. The provision provides that it
is unfair or deceptive for any creditor to repossess a motor vehicle;
visit to the consumer's household or place of employment; or communicate in person
with the consumer. Other states have made the suspension of repossessions and cooperation
with consumers voluntary, but have recommended or asked that lenders do so.
Most reputable and reasonable lenders will do so.
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What should you do if you cannot pay your car loan because of COVID-19?
Reputable auto lenders are offering individual programs to assist borrowers who
cannot
make their car payment because of the COVID-19 crisis. Most of these
are doing so only when the consumer contacts the lender directly.
It is important that you immediately contact your lender to request assistance.
Lenders are under significant governmental, media and practical pressure to cooperate
with impacted consumers to prevent them from defaulting on their loan, losing their
automobile or suffering credit report damage.
Importantly, the COVID-19, or CARES Act, passed by Congress, prohibits negative
credit
reporting for consumers who receive a waiver, deferral or other relief from their
lender. For example, if you request to skip three monthly payments (90-day
deferral), and the lender agrees, as most will, the lender and credit bureaus are
not allowed to report that deferral as a negative or derogatory event or payment
status. It cannot harm your credit score. However, if you do not contact
the lender and confirm its agreement, the missed payments may hurt your credit.
Different lenders are offering various relief for borrowers experiencing trouble
with making loan payments (see below section for how to determine who your lender
is). Some lenders are open about the relief, detailing it on their webpage,
while others provide you details on a “case-by-case” basis when you
contact the lender.
Payment deferrals. The lender allows you to miss (usually between
2 and 4) payments without a late charge or credit damage. With a deferral,
you won’t have to make a payment until your extension period ends. After
the extension period ends, you resume making your regularly-scheduled auto payments,
and your contract will be extended by the number of months your payment was deferred.
However, your loan will still accrue interest.
Payment reductions. You may ask your lender to allow you to make
smaller
payments for a fixed number of months.
Waive late fees. You may ask the lender to allow you to pay late,
but without incurring any late charge.
Lease extensions. If you lease an automobile, and your lease is about
to end, you may ask your lender to extend the lease.
Turn in automobile. Under some circumstances, where your car is worth
significantly less than you owe on your loan, it may make sense to contact the lender
and arrange to have the vehicle voluntarily repossessed.
Below is a list of resources available from different lenders. Keep in mind that
for almost all lenders, you need to contact the lender to request assistance.
With the large number of consumers contacting banks and lenders, it may take
some time to get through by phone. Many lenders allow you to request
deferral by online form. Others have “Chat” functions that usually
provide quicker access than by telephone. Lenders also suggest that
customers use their Mobile or Online accounts (or sign up for one) in order to obtain
relief without having to speak to an agent.
You may also find helpful suggested telephone numbers from other consumer websites
such as Dial a Human. [https://www.dialahuman.com/finance-banks]
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Major Lenders
Note: Current as of 4/3/2020. Contact your lender
for up to date information.
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Lender & Relief
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Link
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Ally
Ally is offering 120-day deferral upon request.
Customers who need relief are encouraged to enroll in Ally’s
auto
online services to defer payments online and avoid long wait times
on the
phone.
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Link
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Bank of America
Bank of America is offering loan payment deferrals and pausing repossessions.
The best way to contact BoA is through its customer “chat” function.
The bank says many questions, including those related to the coronavirus, can be
answered by Bank of America’s virtual assistant, Erica, which is available
online or through the mobile app.
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Link
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BMW Financial Services
BMW Financial Services is urging customers in need of financial
or account assistance to contact it to discuss assistance. It is working with customers
on a case-by-case basis.
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Link
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Capital One Auto Finance
Capital One Auto Finance is offering financial relief options upon request, including
limiting fees, providing minimum payment assistance and offering deferred loan payments.
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Link
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CarMax Auto Finance
CarMax Auto Finance is automatically waiving all late fees effective March 1, 2020
through April 30, 2020. Customers may also be eligible for a payment extension of
up to 60 days for those impacted by COVID-19. Contact CarMax to obtain a payment
extension: 800-925-3612.
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Link
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Chase Auto
Chase Auto is offering 3 month deferral upon request.
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Link
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Chrysler Capital (Fiat-Chrysler or FCA) (Also may be through Ally or Santander)
Chrysler Capital is assisting current customers who reach out to it. Relief includes
expanded payment deferrals, waiver of late charges, and extensions for lessees unable
to return their vehicles. Call 1-855-563-5635 to discuss potential relief
options.
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Link
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Credit Acceptance
Credit Acceptance advises borrowers to call 1-800-634-1506 to discuss arrangements
that fit your current financial situation.
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Link
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Fifth Third Bank
Fifth Third Bank is offering auto loan payment deferral for up to 90 days, and you
will not have to pay late fees. The bank is also pausing auto repossessions for
60 days.
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Link
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Ford Motor Credit
Ford Motor Credit is offering flexible payment arrangements, as well as potential
payment extensions on a case-by-case basis. Customers are encouraged to access their
Account Manager profile either online at
accountmanager.ford.com or
http://www.fordcreditsupport.com/,
through the FordPass app, or through a special hotline at 1-800-723-4016.
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Link
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GM Financial
GM Financial is offering payment relief, including payment deferrals, extensions
and deferred lease payments on a case-by-case basis. It is also waiving late
fees on loan and lease payments due between March 1 and April 30. (There’s
no need to contact the company; the fees will be automatically waived.).
The lender is also granting an automatic one-month extension to lease customers
who
can’t or don’t want to return their vehicles.
It encourages customers to reach out by using their online account, the GM Financial
Mobile app, or by texting INFO to 53721.
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Link
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Honda Financial Services
Honda Financial Services is offering payment extensions and deferrals, as well as
late fee waivers are available. You can request up to 60 days of deferred
payments.
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Link
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Huntington
Huntington is offering up to 90 day payment deferral upon request
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Link
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Hyundai Motor Finance
Hyundai Motor Finance is offering up to 3 month deferral upon request but must show
proof of job loss and not be more than 90 days behind on payments. Additional deferment
available for new car purchases between 3/14/20 and 4/30/20.
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Link
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Kia Motor Finance
Kia Motor Finance is offering 30-day payment extensions to current customers who
are providing care for themselves or a member of their household resulting from
the current global health crisis and are temporarily not able to work. Customers
can request 30-day payment extensions up to three times.
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Link
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Lexus Financial Services
Lexis Financial Services if offering payment relief options. Call 1-800-874-7050
for more details. You can also reach out via the online support center after logging
into your account at LexusFinancial.com.
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Link
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Lightstream (Truist, SunTrust, BB&T)
Lightstream is offering payment deferrals to borrowers who are facing financial
hardship due to an interruption in your income. To start this process, email lender at
customerservice@lightstream.com.
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Link
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Mercedes-Benz Financial Services
Mercedes-Benz Financial Services is offering assistance to customers who have been
financially impacted by the coronavirus. Call 1-800-654-6222.
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Link
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Nissan Motor Acceptance
Nissan Motor Acceptance may offer payment deferrals to both retail and lease customers
based on each customer’s current situation. Call 1-800-456-6622.
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Link
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Old Point National Bank
Old Point National is offering deferrals for auto loan payments. Call 1-757-728-1290.
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Link
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PNC Bank
PNC Bank is offering up to 90 day payment deferral upon request with no late fees
during the postponement period.
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Link
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Santander Consumer USA
Santander Consumer USA is assisting current customers who reach out including: expanded
payment deferrals, waiver of late charges, and extensions for lessees unable
to return their vehicles. Call 1-855-563-5635 to discuss potential relief
options.
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Link
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TD Auto
TD Auto is offering deferment of payments and waiver of late payment fees. For
easier service and to request financial relief, use lender’s Secure Message
Center.Or call 1-800-556-8172.
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Link
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Toyota Financial Services
Toyota Financial Services is offering payment relief options. Call 1-800-874-7050.
You can also reach out via the online support center after logging into your account
at ToyotaFinancial.com.
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Link
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US Bank
US Bank may provide hardship relief. Call 1-888-287-7817.
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Link
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USAA
USAA is offering special payment assistance programs for eligible members including
a 60-day payment extension. Call 855-764-4617.
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Link
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Wells Fargo Bank
Wells Fargo Bank is suspending involuntary automobile repossessions. The lender
also is offering fee waivers, payment deferrals and other expanded assistance for
customers who contact the company. Customers experiencing hardship
from
the coronavirus can call 800-219-9739.
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Link
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Other lenders
Contact your lender directly to see what options are available.
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What should you do when you contact your lender for assistance?
Contact the financial institution that owns your loan and ask for a payment deferral
and interest rate reduction. If that is refused, ask what can be provided. Keep
notes about when you asked, how you contacted the lender, who you communicated with
and what relief you were given. If relief is granted, ask that confirmation be sent
you by email, text, or US mail. If you cannot get some written confirmation, then
write your own letter back that confirms who gave you the relief and what specifically
was given. Keep a copy of that letter or any confirmation you receive back. In the
future, you may need that confirmation. Remember, you are modifying an existing
written agreement, and you want to have written confirmation of any modification.
The written confirmation also helps reduce any miscommunication about what relief
you were provided.
If you are given relief, you should also check to be sure that the information being
reported by credit reporting agencies (Equifax, Experian, and Trans Union) is accurate.
If you are being reported late even though you are complying with the relief plan,
then you need to send a written dispute to the credit reporting agency that includes
a copy of the written documentation of the relief you were given.
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What if my lender will not help?
If you are not able to work out an arrangement with your lender, consult with an
attorney in your state. Protections vary by state, such as some requiring a notice
before your car is repossessed. However, your state may have additional general
protections and there may be other protections specific to COVID-19 that your state
has passed.
Your rights under the federal Fair Debt Collection Practices Act may also
be implicated. Please consult that page to learn more.
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Tips
Here are some additional tips to consider if you are having trouble making payments
on your car loan:
- Contact your lender to learn about hardship programs available.
- Read your credit contract.
- Check when your payments are due.
- Check if there’s a grace period if you’re late.
- Check what conditions put you in default.
- If you are able to work out an arrangement with your lender, be sure to get it in
writing and keep a copy of that writing.
- If you are not able to work out an arrangement with your lender, consult with an
attorney in your state to learn more.
- If you have trouble finding an attorney, try contacting your local legal aid or
bar association.
- You can also go to consumeradvocates.org and choose the Find an Attorney link and
search for lawyers in your state.
Additional Resources
Below are some additional resources to learn more about auto loans and COVID-19.
- Major Consumer Protections Announced in Response to COVID-19 (NCLC):
https://library.nclc.org/major-consumer-protections-announced-response-covid-19
- How to Get Legal Assistance (NCLC):
https://www.nclc.org/for-consumers/how-to-get-legal-assistance.html
- Protecting your finances during the Coronavirus Pandemic (CFBP):
https://www.consumerfinance.gov/coronavirus/