How to Make a Deal With the Bank to Pay off Your Car Loan
Settling credit card debt for less than the full balance is a well-known way to get out of debt, but settling on an auto loan is far more difficult. A car loan is a secured debt, meaning that if you don't make good on your payments, the lienholder can simply take back the car. This gives you very little leverage with which to negotiate a settlement. It is possible to make a deal with the bank to settle on your car loan, but doing so usually requires you to be behind on your payments to the point that the bank has no faith in your ability to follow a payment schedule.
Other People Are Reading
Instructions
-
-
1
Save as much money as you possibly can. Settling a car loan requires a lump-sum payment, usually consisting of many thousands of dollars. If you can't afford this payment, you can't do a settlement.
-
2
Avoid any behavior that would result in your car being repossessed. Missing your monthly payments and filing for bankruptcy can result in your car being taken away, eliminating both the possibility of a settlement and your ability to drive your car.
-
-
3
Contact your lender. Ask if they would consider doing a settlement on your car loan for less than you currently owe. Get any information about a potential settlement in writing.
-
4
Pay the settlement amount according to the terms given by your creditor. Violating your agreed-upon terms gives the lienholder all the ammunition it needs to take back the car, as you have proven yet again that you cannot make your payments.
-
1
Tips & Warnings
Be absolutely certain that you can make the lump-sum payment before you agree to any settlement. Backing out once you realize you can't swing it will do you no favors with the leasing company.
Do not count on the bank settling your car loan. Be happy if you get any reduction at all.
Settling any kind of debt can have serious ramifications for your credit in the future. Debts that are reported as settled can have as significant an impact as filing for bankruptcy.
