If you need to reduce car payment amounts that you pay every month, you might think that the only way to do it is to sell your car and buy one that costs less. This works for some people who don't mind changing vehicles and who have a car that's worth more than they owe on it.

Another popular option to help reduce car payment amounts is to refinance. People can sometimes refinance with their original lender or they can go elsewhere and get a better deal. This method, however, isn't always possible. When the loan for the car costs more than the value of the car, it's tricky to get refinancing. It's also hard to get a good deal on refinancing if your credit is less than perfect.

That's why people who have been late on payments or missed payments typically can't get a good refinancing and instead need to look into loan modification. This is the process of lowering your monthly payment and your interest rates to make your payments more manageable. Unlike refinancing, loan modification starts when you're in a difficult situation and unable to make those payments.

When should you consider a modification? How hard do you struggle to make that monthly car payment? Do you make it late often? Are you behind right now? You should ask yourself these questions and realize that one missed payment gives the lender the right to repossess your vehicle. If they do that, it will damage your credit for years. And every time you make a payment late or you miss one completely, you're hurting your credit score as well and making it harder for you to get good rates on everything from loans to insurance policies.

The sooner you can stop hurting your credit and start letting it repair itself, the better. Sometimes the only way to do that is by not having to pay as much each month on your car payment. To reduce car payment amounts you need to talk to your lender about a loan modification. It's not uncommon for a lender to refuse at first or make it very difficult in the hopes that you will give up and simply struggle to make the payments according to the original terms.

In today's difficult economy, however, more and more lenders are willing to work with you on modifications because it's easier for them to let you keep the car than to repossess it and try to resell it. If you're behind and in danger of repossession and you owe more on the car than it's worth, you should look into a loan modification immediately to lower your payments and avoid a very difficult situation.

If that car is repossessed and resold, you could still owe thousands if the sale doesn't cover the loan. When you owe more than the car is worth it's considered an upside-down loan which is a very financially dangerous situation. Getting a modification that will reduce car payment amounts can save your vehicle and your credit.