How to Get Out of a Car Loan You Can't Afford

Loss of employment or high monthly expenses can contribute to financial problems. When this happens, some people consider ways to cut back and save money. Thus, they may choose to get rid of an expensive car. There are several ways to get out of car loan, which can increase your disposable income and ease financial worries.

Difficulty: Moderate

Instructions

1. Refinance and lower your payments. If you can't afford your current monthly payment, but you don't want to get rid of the car, consider a refinance. With a refinance, you can receive a lower interest rate or extended loan term, which can reduce your payments.

2. Sell the vehicle. Contact your auto lender and inquire about your payoff balance. Next, place ads in your local paper and sell the vehicle. Use the proceeds from the sale to pay off the car loan.

3. Find someone to assume the car loan. Some car loans are assumable. If your auto lender allows vehicle assumptions, find someone to take ownership of your car. The lender will check that person's credit and verify her income. Assumptions don't require down payments.

4. Return the car to the dealership. If you can't find someone to buy or assume the car loan, you can do a voluntary repossession and return the vehicle to the car dealer. The dealer will auction off the car. If the proceeds from the auction are less than the balance owed, you will be responsible for the remaining balance.

Resources

• Lending Tree - Auto Refinance FAQ
• Voluntary Repossessions