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How to get out of a car loan?

How to get out of a car loan?

If you’re paying a car loan and no longer want it, what are your options? This is something we have heard a lot over the past few months so it’s about time we wrote a post about it.

There are many reasons why you might want out of a car loan. You may be able to pay it off and save some interest. You might be struggling to pay and want to settle it before you risk defaulting, or you might be using a bad credit car loan and want something cheaper.

How you go about getting out of the loan depends on the reasons why.

Settling your car loan

The way you get out of a car loan is by settling it. The methods may vary but that is the constant.

You can:

Sell the car and settle the loan – If the value of your car is enough to settle the loan, you can sell it and pay back early. If you’re in negative equity, you will need to add cash to the amount to settle.

Use savings to settle the loan – As long as you don’t empty your savings by settling the loan, this is a viable option. Paying a loan off in cash means you can keep your car and have one less monthly payment to manage.

Get a cheaper loan – If you’re using a bad credit car loan and have been paying it for a year or more, you may qualify for something cheaper. In that case, we can help you access cheaper loans with lower interest rates.

Refinance – If you want lower monthly repayments, a shorter term, or want to borrow more cash using the car loan, you can. Refinancing won’t work for everyone but if your circumstances support it, it’s a viable option.

Watch for prepayment penalties

Some car loans have early repayment penalties included in their terms. This is to compensate the lender for the lost income from interest payments. Not every loan uses prepayment penalties but some do.

If you’re planning to repay your car loan, make sure you check your loan paperwork for this type of penalty first. In certain situations, the penalty may be more than the amount of interest you’ll pay for the remaining term.

If you need help securing a car loan, refinancing or getting out of a bad credit car loan, we can help. Contact our team learn how.

 

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