Americans face car loan repayment issues with a recession on the horizon
The thought of America falling into a recession against is an unpleasant prospect for a country which has already suffered so much death and destruction during the pandemic, but corporate boardrooms are starting to amplify their warnings about the plummeting U.S. economy. Though some business segments were able to record what was a seemingly stunning comeback after the pandemic struck, others have continued to struggle, forcing them to shut down operations and make drastic long-term changes to their business model.
Millions of Americans have continued to file unemployment claims since the start of the pandemic in mid-March of 2020, according to data from the U.S. Department of Labor. While the number of new claims has been much lower than the record highs witnessed in March and April this year, businesses such as travel and restaurants, continue to struggle. Steve Forbes, Editor-in-Chief at Forbes Media, argued that the American economy doesn’t look good due to several barriers to post-pandemic recovery by the current administration, alongside increasing gas prices and inflation.
For many people, the thought of not being able to pay your bills can be quite depressing. With the looming economic recession, many car owners are struggling to keep to the terms of their car repayment plan. Others—after calculating the possible monthly auto loan payments using a tool like CarPaymentCalculator.net—have decided to put off their car purchase or lease because of the uncertainties around their income.
"What the American economy is showing is that it's ready to roar if you remove these uncertainties and barriers," said Forbes in a report.
Forbes said the current administration has been blaming corporations as prices continue to rise, warning about the Federal Reserve’s plan to use the recession as a sort of ‘soft landing’.
U.S. President Joe Biden on Friday 6 June claimed that the report on May jobs should be seen as evidence of the American economy’s unwavering strength and the ability of his administration to successfully create an economic recovery strategy, amidst the public complaints.
“There's no denying that high prices, particularly around gasoline and food, are a real problem for people. But there's every reason for the American people to feel confident we will meet these challenges. Because of the enormous progress we've made on the economy, the Americans can tackle inflation from a position of strength,” said Biden, during a speech at the White House.
If you’re one of those who have been affected by the coronavirus or the impending recession, then it’s important not to panic even if you’re unable to make your car payments. Firstly, you should reach out to your lender to explain your current situation and you may be offered a special forbearance program—which helps borrowers to manage the economic impact of the pandemic. However, if your lender doesn’t offer such programs, there are always other options to explore. Defaulting on your payments without disclosing your current situation to your lender can drastically affect your credit worthiness.
Refinancing your auto loan is a great way to potentially save a large amount of money every month by lowering your interest rate. But two factors influence the efficacy of a car loan refinance: having a loan interest rate significantly lower than when the original agreement was entered or aiming to improve your credit score.
Another step you can take when you know you’re going to miss your payment date is to take advantage of your federal stimulus check. If you’re covered on critical bills such as rent, food and utilities, then you may want to consider setting aside some of that money to offset your car loan. If all approach fails, it would be in your best interest to let the car go until things stabilize.
Currently, the fear of a recession is still quite prominent. Rick Rieder, global fixed income chief investment officer at BlackRock told Bloomberg on Tuesday that while the employment number in May seems quite good, it’s most likely the best America would get for a long time.
Irrespective of whatever situation you find yourself in, it is important to take the right action. There are lots of negative consequences when you fail to make your car payments as scheduled. The only thing more depressing than being stuck in a traffic jam is doing so in a car that you can’t afford.