What to Do When You Can't Make Your Car Payment
How car payment hardship programs work
If you fall behind on your car loan, your lender may offer a hardship program — a temporary change to your payment terms that lets you catch up without losing the car. These programs are not automatic. You have to contact your lender and ask, and what they offer depends on the lender, your loan terms, and how far behind you are.
Most hardship programs do one of three things: lower your monthly payment for a set period, pause payments temporarily, or extend your loan term so payments spread over more months. Some lenders combine these. The goal is to give you breathing room while you get back on track — but the program itself costs you money, usually by adding interest or extending how long you owe.
The catch is timing. Lenders are more likely to work with you if you contact them before you miss a payment, or within the first month of missing one. Once you are several months behind, your options narrow. At that point, the lender may move toward repossession instead of negotiating.
Key Takeaways
- Contact your lender as soon as you know you cannot make a payment — waiting makes negotiation harder and repossession more likely.
- Hardship programs typically lower your payment, pause payments, or extend your loan term, but most add interest or cost you money in another way.
- Your lender is not required to offer a program, so ask what options exist for your specific loan and situation.
- If your lender will not negotiate, you may be able to refinance with a different lender or explore selling or returning the car.
Types of hardship programs lenders offer
Payment deferral pauses your payments for a set time — usually one to three months — and adds those payments to the end of your loan. You owe the same total amount, but you do not have to pay right now. This works if your hardship is temporary, like a job loss you expect to recover from.
Payment reduction lowers your monthly payment for a period, usually three to twelve months. The lender may reduce the amount you owe each month, or they may extend your loan term so the same total debt spreads over more months. Either way, you pay less now but more total interest over the life of the loan.
Loan modification is a permanent change to your loan terms — a lower interest rate, a longer term, or both. This is rarer and usually only happens if you have been a good customer or if the lender thinks you are about to default and wants to keep you paying. Some lenders call this a "workout agreement."
A few lenders offer forbearance, which is similar to deferral but may not add the missed payments to the end of the loan. Instead, the lender forgives part of what you owe. This is uncommon and usually only for borrowers in severe hardship.
How to ask your lender for a hardship program
Start by calling the customer service number on your loan statement or bill. Tell them you are having trouble making your payment and ask what hardship options are available. Have your loan number and account information ready. Be honest about why you cannot pay — job loss, medical emergency, reduced hours — because lenders are more likely to work with you if they understand the situation is temporary.
Some lenders have a dedicated hardship or loss mitigation department. Ask to be transferred there if customer service cannot help. If you are already behind on payments, mention that and ask whether the program can include the missed payments in the arrangement.
The lender will likely ask for proof of hardship — a termination letter from your employer, medical bills, a letter explaining the situation, or proof of income. They may also run your credit or review your account history. This process usually takes a few days to a week.
Get any agreement in writing before you agree to it. The letter should spell out the new payment amount, how long the program lasts, what happens when it ends, and whether missed payments are added to the loan or forgiven. Do not rely on a verbal promise.
What happens if your lender says no
Not all lenders offer hardship programs, and some will refuse even if they do. If your lender will not negotiate, you have other options, though none are ideal.
Refinancing means taking out a new loan with a different lender to pay off the old one. If your credit score has dropped since you took out the original loan, refinancing may be harder or more expensive. But if you have improved your credit or if interest rates have dropped, a new loan might have a lower payment. Contact banks, credit unions, and online lenders to see what rates they offer.
Selling the car privately or trading it in can get you out of the loan if you owe less than the car is worth. If you owe more than it is worth — called being "underwater" — you would have to pay the difference out of pocket. Check your car's value on Kelley Blue Book or NADA Guides to see where you stand.
Voluntary surrender means returning the car to the lender. You stop owing the monthly payment, but the lender will sell the car and may sue you for the difference between what they sell it for and what you owe. This damages your credit for years and can result in a judgment against you, so it is a last resort.
How hardship programs affect your credit
A hardship program itself does not automatically hurt your credit if you make the new payments on time. However, if you were already late when you entered the program, those late payments are already on your credit report and will stay there for seven years.
Some lenders report hardship programs to the credit bureaus as "account in deferment" or "modified terms," which may lower your score slightly because it signals financial stress. But this is usually less damaging than missed payments or repossession.
The key is to make every payment under the new agreement on time. Missing payments during a hardship program can lead to repossession even faster than missing regular payments, because you have already shown you cannot pay and the lender has already tried to help.
Repossession and what to do if it happens
If you stop paying and do not contact your lender, they can repossess the car without warning. In South Carolina, a lender can repossess as soon as you are one payment behind, though most wait longer. Once the car is repossessed, the lender sells it and sues you for the difference between the sale price and what you owe — called a "deficiency judgment."
If you receive a repossession notice or if your car is repossessed, contact a lawyer immediately. South Carolina has rules about how lenders must conduct repossession, and if they break those rules, you may have a defense. Some legal aid organizations in South Carolina offer free or low-cost help with repossession cases.
If you cannot afford a lawyer, contact the South Carolina Bar's Lawyer Referral Service or ask your local legal aid office whether they handle repossession cases. The sooner you act, the more options you may have.
Frequently Asked Questions
Can I get a hardship program if I am already behind on payments?
Yes, but it is harder. Lenders are more willing to negotiate if you contact them before you miss a payment. If you are already behind, call immediately and explain the situation. Some lenders will include missed payments in the hardship agreement, but others will require you to catch up first or will refuse to help.
Will a hardship program stop my car from being repossessed?
If you enter a hardship program and make the new payments on time, repossession should not happen. But if you miss payments under the hardship agreement, the lender can repossess even if you were making payments before. Treat the hardship program as seriously as your original loan.
How long does a hardship program last?
Most programs last three to twelve months. When the program ends, your payments return to the original amount — or to a new amount if the lender modified your loan permanently. Ask your lender in writing how long the program lasts and what happens when it ends.
Can I refinance my car loan if I am behind on payments?
It is much harder. Most lenders will not refinance a loan that is in default or more than one or two payments behind. If you are current on your payments, refinancing is easier. If you are behind, ask your current lender about a hardship program first.
What if I cannot afford the payment even after a hardship program?
Talk to your lender again and ask whether the program can be extended or modified further. If not, explore selling the car or refinancing with a different lender. Voluntary surrender is an option but damages your credit and may result in a lawsuit. A lawyer or legal aid organization can help you understand your choices.