How does a Car Loan Modification Work?
Money is always a sensitive topic. And money with legal obligations – an even bigger one!
In the general sense of the term, a loan (or a mortgage), of any kind, is a complex subject by virtue of involvement of monetary terms along with at least two parties to it. It is therefore critical, to all parties involved, that they clearly understand the terms and conditions involved and the repercussions in case of defaults. At Car Payment Helper, our quest is to help you understand the intricacies of the car loan modification in Brea, California, and simplify the different stages of the process so that you are capable of making informed decisions when it comes to keeping your car where it belongs. With you!
Demystifying loan modification
Loan modification (or debt rescheduling) is a process of altering the applicable terms of a pre-existing loan outside of the initially stated terms of the contract by a lender in response to the debtor’s inability to recompense the loan in the long term.
The ultimate objective of loan modification is to assist the debtor to legally figure out mutually agreeable ways in conjunction with the lender to avoid repossession. Typically, in case of repossession, the lender stands to lose money along with the added worry of spending money on the repo man and preparing for resale of the car.
Most acknowledged reasons for considering an Auto loan modification
Quickly, let’s look through some of the more acceptable circumstances for validating the necessity of a car loan modification:
- Any kind of verifiable financial setback to the borrower close to the start of loan defaults
- The debtor is part of an upside-down car loan. A loan is called an upside-down loan when the debtor owes more than the actual worth of the car and would not be able to repay the loan even if they were to sell off the car.
- The car lost its value for no fault of the debtor – financial or physical (accidents)
Well, if after assessing your current situation you have decided to go ahead with the auto loan modification, let us together try to unearth the how of loan modification. Let’s look at the different stages of “How to go about securing a car loan modification in and around Brea, California?”
Stage 1: Keep the lender informed.
It is good to keep the lender in the loop when you are able to pay the installments. But it is absolutely critical to do so the moment you realize that further payments will not be possible in the current format.
Stage 2: Pay attention to details and collate all the necessary documents along with an original Letter of Hardship for a car loan modification.
All documents requested by the lender must be carefully put together along with the letter of Hardship which clearly describes your specific existing situation due to which the car loan modification has been requested for.
Stage 3: Be patient post submission of documents.
It is important to remain calm after the documents have been submitted for a verdict on your application.
Stage 4: Carefully investigate all the options given by the lender with regards to the car loan modification.
It is often a good practice to sit across the table with the lender and reach a consensus on one acceptable and doable solution agreeable to both parties.
Car Payment Helper, California, could be your partner at every step of the tedious and tricky road of auto loan modification. They help you simplify your already complicated financial tangles.
Please note that there is a difference between Car Loan Modification and Auto Refinancing. While there might be some similar privileges under the two options, they are NOT the same. The parties discussing the modification of the terms of the contract are the lender themselves and the third party respectively along with the debtor.
By meticulously following the outlined stages, keep your car where it belongs. Yes! With you.