How much the bank is willing to work with you to pay off your car depends on the current status of your loan, the bank’s policies and what kind of a deal you’d like to put in place. In some cases, you may be able to get the bank to agree to cut the interest or even lower the total amount you owe. First decide what you want to accomplish with your negotiations, then approach the bank to see what you can work out.

Reducing Your Monthly Payment

Your bank may be willing to rewrite your loan as a means of lowering your monthly payment amount. Be aware that a new contract may mean that your car ends up costing you more in the long run, though with good credit, you may be able to drop the payments by lowering the interest without extending the loan. Payments are commonly reduced because the bank extends the period of your loan, meaning that you’ll be making payments for a longer period of time. You’ll still owe interest on the balance until the loan is paid off, and the bank may also raise the interest rate you’re being charged, costing you even more.

Increasing Your Payments

In some cases, you may find yourself in a position to make larger monthly payments on your car. The lender will always accept larger payments, whether or not you negotiate a deal, but you may be able to use the larger payments to your advantage. Talk to the bank about refinancing your contract so that the higher payments are locked in. At the same time, make it clear that you’re willing to make bigger payments until the loan is paid off, but only if you get a lower interest rate on the new deal, resulting in significant savings for you.

Getting an Extension

If you find yourself facing a temporary hardship and are unable to make your car payment, ask the lender for an extension on your contract. Typically this means the payment that you’re struggling with will be moved to the end of your contract period, extending your overall payment period by a month. Expect your bank to have certain rules around this process. You might not be able to get an extension until you’ve made six or more payments, and you’ll almost certainly have to pay a fee for the service.

Dealing with Repossession

When your car’s been repossessed, and you find yourself stuck with making the payments on a vehicle you no longer have, talk to the bank to see whether you can reach a settlement. Because the lender no longer has any collateral for the loan, it may be easier to come to a payoff agreement. If the car has been sold, you are only liable for the difference between what the sale brought and what you owed at repossession, plus fees. The bank may be willing to accept a percentage of what you owe and write off the rest.