What to Say When Trying to Settle a Car Debt for Less

Settling a car debt for less than the total amount is an easier path than waiting until the company repossesses your vehicle, leaving you without transportation and with a black mark on your credit report. Once your auto loan has become 60 to 90 days late on payment, your lender will be far more amenable to negotiation. Remain as calm as you can and avoid asking yes or no questions. Don't agree to any payment plan that you are incapable of paying.

Negotiating Basics

The most important thing to remember if you're speaking to someone who can say "no" to you is to avoid asking questions with yes or no answers. Instead of asking a question like, "Are you willing to settle this debt?" say "I would like to settle this debt. How can you help me?" If you ask a leading question, the negotiation will shift to your advantage. Never use profanity or yell at an auto loan officer, even if you feel angry. They do have authority to repossess your car if you are more than 90 days behind payments.

Reducing the Balance and Interest

Make a low initial offer for reducing your auto loan balance and interest. Remember to ask leading questions. For example, try saying, "I have only $200 per month to spare to make loan payments. How can you help me arrange a payment plan?" They may extend the period of the loan, reduce your balance, temporarily freeze your interest payments or any number of things to avoid the expense and inconvenience of repossessing your car. You're not obligated to disclose your income, your other debts or any ability to borrow money from family or friends.

Don't say that you are "willing" to spend a certain amount. Say that you only have a certain amount to spend on your auto loan.

Brinksmanship

If the auto lender still won't create a payment plan amenable to you, you can put further pressure on them by bringing up your alternatives: refinancing and bankruptcy. If you apply for bankruptcy, all collection attempts will cease. If you successfully file for bankruptcy, in most states you can keep your vehicle if you use it for transportation to work or for bringing dependent children to school. Also bring up that you can potentially refinance the vehicle instead of remaining with your current company, which would deny them future interest payments on the car.