That new car smell hasn’t even faded and you’re already having trouble making your auto loan payments.

You’re not alone. A report issued Wednesday by Experian shows that although 30-day delinquencies on car loans are down, 60-day delinquencies continue to rise. The information services provider estimates that more than 1 million consumers are 60 to 89 days late on their auto loans.

There are many reasons you can get into trouble on your car loan, says Bruce McClary, vice president of communications for the nonprofit National Foundation for Credit Counseling. Perhaps you lost your willpower at the dealership and bought more car than you could afford, he says. Or maybe your circumstances changed since you drove the vehicle off the lot.

“A month or two later the rug could be pulled out from under you with a medical emergency or you lost your job,” he says.

Whatever the reason, if you’re having trouble paying your loan, there are measures you should consider taking immediately.

What to Do

Assess your financial situation. Review your income and expenses to determine whether you must take drastic action, such as getting rid of the car, or tweak your budget, McClary says. Then develop a plan. If you need help, contact a nonprofit credit counselor, he suggests. You can find one on the NFCC website.

Let your lender know you’re struggling. Notifying your lender about your financial situation shows that you want to be responsible and repay your loan, says an article published by the Consumer Financial Protection Bureau. The fix could be as easy as changing your payment due date if you’re waiting for a paycheck and want to avoid late and missed payment fees.

Some lenders have temporary hardship programs that might let you postpone some payments, McClary says. Or your lender might restructure the loan by increasing the term and, as a result, lowering the monthly payment.

Make reasonable deals. If you make a deal with your lender, make sure you can keep up with the new payment schedule. You don’t want to create the same problem all over again, says Pamela Banks, senior attorney and program manager for Consumers Union, the policy and mobilization arm of Consumer Reports. Banks also recommends:  

  • Keeping records of your communications with your lender and copies of all documents. They might be helpful should you need to verify the debt, the amount, relevant dates, or agreements with the lender. 
  • Monitoring your credit report to avoid negative reports (or errors) that could affect your credit score.

Refinance the loan. Many banks and credit unions have auto loan refinance programs that often have no fees or up-front payments. Keep in mind that not every car loan qualifies for refinancing. If yours does, refinancing at a lower rate will bring down your monthly payments and your total cost. Also, find out whether your current loan has a prepayment penalty, which could reduce your savings. 

Think beyond the car loan. McClary recommends being creative when thinking about your options. One approach, he says, is to free up money that goes to paying other debt. For example, you might consider refinancing your mortgage or, if you have a lot of credit card debt, taking advantage of a card issuer’s zero- or low-interest balance transfer offer.

Other options may be to apply for a debt consolidation or home equity loan from your bank or credit union, McClary says. But those loans, poorly managed, can put you deeper in debt, he warns. A home equity loan is particularly dangerous because you’re putting your house up as collateral, he says. McClary says a nonprofit credit counselor may help you figure out the best solution.

Ditch the vehicle. If you decide that you can no longer afford the car, one option may be to sell or trade in the vehicle and find a car you can afford, the CFPB says. When considering this option, McClary says, find out how much you still owe on the loan and compare that to what your car is worth. (Find your car’s value by going to Enter your make, model, and year, click Go, and, on the next page, click View Pricing & Local Inventory.) If you took out a long-term loan with little or nothing down, you may find that you owe more than the vehicle is worth. That makes selling the car or trading it in impractical because you won’t get enough to pay off the loan, McClary says.

He also advises avoiding dealer loan bailout programs that let you trade in a car that’s worth less than you owe and roll the difference into a loan for another vehicle. “Financially that’s a very, very bad idea,” he says. “You’ll be going in debt for life.”