If you miss a payment for a secured car loan you are at risk of losing your car. A secured car loan states that the lender may take possession of your car (or other secured asset specified in the contract) if you cannot repay the debt. Ensure that you seek advice from ASIC or the Office of Fair Trading in your State or Territory or visit the moneysmart website if you find yourself in this situation. Even if you have an unsecured car loan, your property could still be at risk; in the event that your lender takes legal action to recover the debt, your assets and any money you have in the bank will be taken into account and may be sold or used to repay your debts.
For any car loan, each missed payment will be noted in your credit report and this will have a negative effect on your credit rating which will make applying for credit in the future more difficult. As soon as you think you may have problems meeting your payments, you should contact your lender. Most lenders will help you keep up with repayments; they often allow you to rearrange your payment schedule for example. This could help if your wage has failed to reach your bank account and you do not have the required funds to cover your loan payment.
Alternatively, lenders may offer you a payment holiday if the problem is short-term. A payment holiday adds the missing repayment onto the total loan amount. Although this increases the total cost of the loan because interest will be charged on the missed repayment amount, it offers you a bit of flexibility and can help you to keep on top of your finances. Keeping up repayments is essential to clearing your debt. If you cannot afford the full payment, offering to pay at least some will show that you are willing to honour your loan commitments and enable the lender to offer you a greater range of debt management options.
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