Things You'll Need:
- Loan documentation
- Personal budget information
- Lender contact information
- Internet access
- Fax machine
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Step 1
Start exploring your options before it is too late. The moment you begin feeling like you are over your head or your car loan is too much to manage, start looking at your options. Waiting until the last minute to act will often limit your choices and cause unnecessary emotional and financial stress.
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Step 2
Contact your loan company and discuss options with them. If you are slightly behind in your payments, do not get alarmed or upset if the individual you are speaking with initially tries to pressure you to make a payment. Explain to him your reason for calling and ask to speak with someone who has experience with loan modifications.
If you are trying to keep your vehicle, ask about renegotiating your loan. Many lenders will work with you to reduce your monthly payment or to help you catch up with past due payments. If your lender is unwilling to reduce your payments, discuss the possibility of having another individual or business assume the loan. Most lenders will allow credit worthy individuals take over your existing loan balance with a transfer or document fee charged to you. -
Step 3
Ask friends and family to take over your loan if you choose to have another individual or business assume your loan. Be sure to tell them the monthly payment amount and the months remaining on the loan. If no one you know is willing or able to take over the payments, place ads in your local newspapers' automotive sale ads.
In any ads you place, be sure to advise potential buyers regarding the terms of the loan. In addition to monthly payments, let them know the minimum credit rating required by your current lender. This will help reduce the number of responses you receive from unqualified buyers. -
Step 4
Contact your lender to have him fax all necessary documents to you and the buyer once an individual is found who is willing to take over your car loan. These documents will include a credit approval form for the potential buyer and forms authorizing your removal from the title. The lender may also require you to pay a fee for transferring the title to the name of another individual.
The fees can often be found in the original loan documentations. If you believe you will not be able to pay the fees yourself, you can require the new owner to pay the fees in place of a down payment. These fees are usually hundreds of dollars less than the down payments usually required by most dealers.
Once all fees are paid and the lender has approved your buyer, give the new owner your keys and any owner manuals you have.
