What should you do if you can’t make your auto loan or Honda lease payments because of the coronavirus pandemic? Millions of Americans may find themselves facing such financial hardships in the coming months. However difficult the situation may feel, lessees and those financing their vehicles do have a few options to help with car payments and avoid defaulting or preventing a repossession.
If you’ve been greatly impacted by the COVID-19 outbreak, consider deferring your car loan payments as an emergency tactic. Many automakers and lenders have special payment-deferral programs in place during these unprecedented times. For instance, Honda is offering customers up to 60 days of deferment and waiving all late fees for anyone affected by the coronavirus crisis. You’ll be able to delay payments for up to 60 days – or potentially longer if you speak with your lender – and those payments will be added to the end of your car loan, ultimately extending the length of that loan.
It’s important to note that you must speak with your lender to approve of these deferments before you miss a payment. If you don’t alert them of changes, lenders may put your loan in delinquency, which will affect your credit score. Your credit will not be negatively affected by an approved deferment.
Although interest rates on loans will accrue throughout the deferment period, this may be the best option for car owners who can’t afford to make their monthly car payments. Rescheduling loan payments may also be on the table if you need temporary financial relief – simply discuss your options with your lender or Honda Financial Services for more details about COVID-19 deferment, payment extensions and any possible tax deductions that may be available. (When contacting your car lease company or bank about receiving coronavirus-related assistance with money, please be patient as these establishments are likely experiencing a large volume of calls.)
Because of the coronavirus outbreak, you may find that your typical lease-end process has changed. If your vehicle’s lease maturity date is coming up, automakers and car dealers are providing more options for you to maintain transportation. Instead of returning your vehicle and finding a new Honda to lease at the dealership, you could be eligible to extend your lease month-to-month or for a fixed term. This could be a good idea if you’re someone who is at a higher risk for severe COVID-19 illness, as outlined by the CDC.
As always, it’s best to speak with your auto or Honda dealership for info. You may even be able to handle the lease-end paperwork and preliminary return inspection from home, then schedule a pick-up or drop-off without interacting with any of your dealer’s salespeople.
Car Loan Refinancing
Reducing your monthly car payment right away via refinancing is another option. With a refinanced car loan, you’re paying the balance of your old loan while benefiting with a lower interest rate and, therefore, a lower monthly payment. Loan extensions can be combined with refinancing, though that would stretch your payments out over time and leave you with more interest to pay off.
To see what your refinanced vehicle loan interest rate would be, call a car dealer near you for quotes and to ask if you should trade in your vehicle.
Auto Insurance Coronavirus Refunds
You’re probably driving less often, and your car insurance company sees it in the data – car accidents have gone down dramatically since the COVID-19 outbreak started. So, who needs auto insurance right now? Many insurance agencies have taken a proactive approach to help customers by issuing cash refunds, handing out credits, and reducing premium rates. Here’s a list of national auto insurers and what they’re doing during the coronavirus pandemic:
Allstate’s Shelter-in-Place Payback is giving customers 15% money back on their April and May premiums. Payment relief can be requested for up to 60 days, which allows customers to delay payments for up to 60 days without penalty. If you use your vehicle to make commercial deliveries, Allstate may even pay your premiums. Identity Protection is also provided for free to everyone, Allstate customer or otherwise.
April premiums are being cut by 25%.
Through May 31, a $2 billion payout is being sent to State Farm auto insurance customers, which equates to a 25% refund in credits per policyholder.
Through June 17, non-payment cancellations will be paused and late fees will not be assessed for all USAA customers. Special payment plans are available, and a 20% auto insurance credit (on two months of premiums) will be issued to all USAA members.
Progressive’s Apron Relief Program is providing customers 20% credits on April and May premiums, with additional credits potentially being available for months to come.
Customers will receive a 15% cash refund on two months of Liberty Mutual auto insurance premiums.
The NJM Policyholder Relief Program refunds 15% of three-month premiums.
The GEICO Giveback program is crediting customers 15% of their next full (6-month) policy term when that policy renews.
The company’s Stay-at-Home Auto Premium Credit Program automatically gives customers a 15% credit on their April and May policy.
The Auto Insurance Premium Relief Payments program will give all AFI customers a one-time, $50 check for each covered vehicle.
Most Esurance customers will receive a 15% cash payback on their April and May premiums, with additional payment relief being available.
Personal auto insurance customers get an automatic 15% refund on two months of premiums.
All policyholders at Nationwide will get a $50 refund.
Special APRs on Certified Pre-Owned Honda Models
Honda is offering specials on popular certified pre-owned Honda vehicles until June 1. Get a low APR when financing a certified Honda Civic, Accord or CR-V from a Honda dealership near you. If you’re in the Miami area, shop any of our South Florida Honda Dealers online to browse our selection and request a quote.