d. Negotiate with lender or Voluntarily Return Car

If the above solutions do not apply, you should consider negotiating with your lender for a reduced payment, loan modification or term extension.

When you fall behind on payments, lenders often prefer to keep the loan “performing” rather than repossess the car, since repossession is expensive, time-consuming, and unpredictable. In this event, lenders often offer modified plans that reduce your payments. These plans have different names, including Temporary Payment Reduction Plan, Hardship Plan or Good-faith payment program. These programs became common during the pandemic (for obvious reasons), and they continue today.

You should be cautious of these plans, however. For a modification plan to be effective—that is, for it to replace the original terms in your contract— it must (1) be in writing, (2) signed by the lender, (3) explicitly change the payment amounts or the timing and (4) be accepted by the borrower.

Phone conversations and promises by the customer service representative don't change the contract. Emails don't change the contract unless they are signed and explicitly, and even making a reduced payment doesn't by itself, modify the contract.

These so-called "oral modifications" are routinely prohibited in car sales contracts. {{alias: ((HY_QNNNJb)) NY Gen Oblig L § 15-301("A written agreement or other written instrument which contains a provision to the effect that it cannot be changed orally, cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement of the change is sought or by his agent")}};

{{alias: ((aqB_L-uc2))NY Gen Oblig L § 5-701 (Under the statute of frauds, an "agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking” amongst other things, “[b]y its terms is not to be performed within one year from the making.”)}}

For example, in a recent case, a borrower failed to complete enrollment in Capital One's Temporary Payment Reduction Plan (TPRP) because he never signed and returned the required agreement letter. The email from Capitol One clearly stated that after making the good faith payment, he needed to "sign and return your agreement letter to complete your enrollment"—a two-step process where the borrower only completed step one. His $262.63 payment alone did not modify the Original Contract because: (1) the contract required any changes to be in writing and signed by Capital One, which the unsigned email was not; (2) his partial payment looked the same as simply making a late payment under the original contract—it didn't prove a new agreement existed; and (3) paying less than what he owed could just as easily mean he was breaching the contract as it could mean there was a modification. Because the borrower never signed and returned the TPRP letter, no binding modification existed, he remained in default, and Capital One had the right to repossess his vehicle. Garcia v. Dezba Asset Recovery, Inc., No. 22-CV-01736 (KMK), 2023 WL 2643931 (S.D.N.Y. Mar. 29, 2023).