Step One - Call Your Lender

The first step to possibly obtaining a car loan modification is calling your lender and letting them know that you're no longer able to make payments the way they're currently structured. Your lender will instantly tell you about the dangers of not making your payments and the possibility of repossession. Ultimately, they do not want your car.

The further behind you are on your payments, the more receptive many banks become to the idea of a loan modification. However, there is no guarantee your bank will actually grant you a loan modification.

Step Two - Prepare Your Documents

If your bank approves the idea of a loan modification, they will most certainly require documentation regarding your hardship or reasons for not being able to make your payments. They may require notarized letters or affidavits, copies of phone or utility bills, or any number of other documents. Send all requested documents to your lender.

Step Three - Wait

Once you have submitted all the requested documentation to the lender, there's not a whole lot you can do, except wait. You should also be aware that repossessions can, occur while applying for a loan modification. Many times, departments within the same bank simply don't communicate very well. If repossession occurs, there won't be anything the modification department can do to help you.

Even while applying for a loan modification, try to pay something toward your current monthly payments. Also, make sure to ask the modification department to inform the repossession team of your intentions.
If you are seriously delinquent on your car loan payments, a loan modification could help you keep your car and avoid repossession. Loan modifications are simply adjustments to your monthly payments, and sometimes your interest rate, which are made to help you avoid repossession. Banks sometimes allow for loan modifications as a final, and last-ditch effort to avoid having to take the car away from you. Not all banks offer loan modifications on car loans. However, if you know you simply can't afford the payments, trying costs you nothing. If you are in need of a car loan modification, here are a few ideas on how you should proceed:
What Is Vehicle Modification?