Deacons can get this information to members in trouble. Many vehicle manufacturers are letting people defer their payments because they know they have been hit hard by the coronavirus pandemic. Here is how to contact them…
Automakers know people are suffering with major job losses as the economy is decimated by shutdown orders. They have responded by offering to let those with car loans stop making payments for varying periods of time, depending on the company.
Edmunds has run an article on car payment relief programs where they list the companies providing assistance. The article provides brief summaries of each company’s policy. Most carmakers are listed.
Honda and Acura are deferring payments by up to 60 days. Hyundai is offering up to six months of relief for people who lose their job, and Kia is deferring payments for up to 90 days. Owners of Ford, GM, Chevrolet, Dodge, and Chrysler vehicles can also ask for support as well.
Click here to read the article. It is updated regularly.
THE CONSEQUENCES OF DEFERRAL
This isn’t free money. The deferral is likely to tack the missed payments on to the end of the loan, which will extend its duration and cost more in interest. Kelley Blue Book says “Interest will continue to accrue during the extra time the loan is active, for which you will be responsible. There may be other fees involved as well, so be sure to read the fine print of your loan agreement.”
KBB provides an example to show how much deferral could cost:
Monthly car payments average $554, according to 2019 fourth-quarter data from Experian. The financial analyst also reports that on a loan balance of $30,000 over 60 months at 3.74 percent, total interest payments are $2,939. Extend the terms one year, and that total will jump to $3,558 or more than $600. So, remember, if you extend the loan, you could be adding hundreds of dollars to your total cost.
However, consider the upside. In the KBB example, the person is deferring their loan for one year. That equals $6,648 in car payments. That is a significant relief to someone who has just lost their job. The cost for this relief is $619 in extra interest, which equates to a loan at a rate of about 9.3%. It’s high, but it might be worth it to help the borrower get back on their feet.
Deacons need to explain the price of deferral to members. However, it is probably better for the church member to defer payments and pay a little more in interest in the long-run rather than to default on the loan. Their credit history won’t suffer. They also won’t suffer a blow to their self-image.
Edmunds offers this general advice when people face financial hardship (emphasis added):
In hard times, a number of people tend to overlook their car payments in favor of more critical purchases. This is understandable, but it could harm your credit in the long run. Don’t be afraid to call your lender. Others are in the same predicament, and lenders may be able to offer reduced payments or give you an extension. This communication is important to show that you are committed to paying the loan and keeping the account in good standing.