Car Loan Payment Stalls? Don’t Avoid the Problem: 4 Key Points to Know Before It Escalates to Save Your Vehicle from Repossession

In an era of economic instability, the problem "unable to keep up with car payments" is something many are facing. Knowing the proper legal ways to handle it can preserve your credit and greatly reduce damage. "Thairath Online News Team" will take you through in-depth solutions and help you find the best way out.

1. Quickly contact the finance company to negotiate debt restructuring.

Don’t wait until payments are overdue and you are chased. If you realize you are struggling, call the finance company immediately to explain your situation. They usually have solutions available.

The most important thing is to prepare all relevant financial information as evidence for the finance company. Generally, they offer options such as:

• Request to extend the payment period: This lowers your monthly payments but may result in a higher total interest amount.
• Request a temporary payment suspension : Some financial institutions or finance companies have policies allowing temporary suspension of principal payments, paying interest only, or temporarily pausing installments under certain conditions.
• Request interest rate reduction : This may be possible in some cases according to government or company policies.

However, extending the payment period increases total interest significantly. How much your monthly installment can be reduced depends on the collateral value and your repayment ability.

Nevertheless, debt restructuring negotiations should be done before missing payments to protect your credit history recorded by the company and the National Credit Bureau, called the Credit Bureau. Restructuring before becoming a Non-Performing Loan (NPL) exempts you from having the restructuring reported to the Credit Bureau.

2. Sell your down payment or transfer the contract.

However, if you assess that long-term payments are impossible, selling the car so someone else continues paying is the best solution.

Find a buyer for your down payment or give it away for free so they continue payments. Take the new buyer to the finance company to legally transfer the hire-purchase contract. The advantage of selling the down payment or formally transferring the contract is that you avoid paying value-added tax twice because the original payments already included VAT. This is better than closing the old account and taking a new loan, which incurs VAT twice. It also helps preserve the borrower's credit history.

A very important caution: do not transfer informally, sell your down payment without changing the contract, or just let someone else drive the car. If they disappear with the car, you remain liable for the loan and could face criminal charges for "embezzlement."

3. Refinance the car

If you have been paying for some time, usually over 50% of the debt, consider refinancing to reassess the car’s value and obtain a new loan, which may reduce your monthly payment. But calculate carefully if the interest and fees are worthwhile.

4. Negotiate to return the car.

If all else fails, returning the car is a last resort. But understand that returning it does not necessarily clear your debt. When the finance company auctions the car, it usually sells for less than your outstanding debt. The shortfall (deficiency) will still be pursued by the finance company through collection or legal action. Therefore, negotiate the return and deficiency clearly before deciding.

Returning the car to the finance company shows your willingness to resolve the debt problem. You can use this to negotiate for reduced damages or bigger discounts to ease your debt burden.

Will you be listed in the Credit Bureau if you can't keep up with car payments or return the car?

If you stop paying or delay car payments beyond the due date, this payment history will inevitably be recorded by the "Credit Bureau" or the National Credit Bureau Co., Ltd.

• If you are 1-2 installments behind, your Credit Bureau record will show a status of "late payment," and other financial institutions will see that you have cash flow problems.
• If you are over 3 installments behind or more than 90 days overdue, your account status changes to Non-Performing Loan (NPL), commonly called blacklisted or flagged in the credit bureau, which will nearly completely bar you from obtaining loans, credit cards, or home/car financing from formal financial institutions.

In cases where the finance company repossesses the car or you return it yourself,

• the worst credit record occurs: the Credit Bureau will clearly show that the account had asset repossession or became a bad debt.
• Deficiency debt: When the finance company sells the car at auction for less than your outstanding debt (deficiency), if you refuse to pay this shortfall, the bad debt status will remain recorded in the Credit Bureau indefinitely.