Table of Contents
- How to Get Out of a Car Loan
- Pay off the Loan
- Refinance the Loan
- Trade in the Vehicle
- Sell the Vehicle
- Voluntary Repossession
How to Get Out of a Car Loan
If you’re struggling to make car loan payments, you may be looking for ways to get out from under the loan. Depending on your financial situation and the terms of the loan, there are a few different options for getting out of a car loan.
Pay off the Loan
If you have the money available, paying off the loan is the simplest way to get out of it. You’ll need to check the terms of your loan to find out how much you owe on the vehicle. If you have the money available, you can simply pay off the loan in full and own the vehicle outright.
Refinance the Loan
If you’re unable to pay off the loan in full but you still want to keep the vehicle, you can try to refinance the loan. Refinancing involves taking out a new loan to pay off the existing loan. You’ll need to shop around for a new loan with better terms than your existing loan, such as a lower interest rate.
Trade in the Vehicle
If you’re looking to get out of your current car loan and purchase a new vehicle, you can trade in the existing vehicle. When you trade in the vehicle, the dealer will pay off the balance of the loan and give you a credit toward the purchase of the new vehicle. This is a good option if you want to upgrade to a newer vehicle but don’t have the money to pay off the existing loan.
Sell the Vehicle
If you don’t want to keep the vehicle, you can try to sell it. You’ll need to research the market value of the vehicle and find a buyer who is willing to pay that amount. Once you have a buyer, you can use the money to pay off the loan and keep any remaining funds. This option is best if you’re able to sell the vehicle for more than you owe on the loan.
Voluntary Repossession
If you’re unable to pay off the loan or sell the vehicle, you may need to consider voluntary repossession. This involves voluntarily returning the vehicle to the lender in exchange for forgiving the loan. This option is best as a last resort as it will negatively impact your credit score.
How do you get rid of a financed car without hurting your credit?
The best way to get rid of a financed car without hurting your credit is to pay off the loan or refinance the loan with better terms. You can also try to trade in the vehicle or sell it, but this may not be an option if you owe more than the vehicle is worth.
Will a voluntary repossession hurt you?
Yes, a voluntary repossession will hurt your credit score. It will also stay on your credit report for up to seven years, so it’s best to avoid this option if possible.
Is voluntary repossession a good idea?
Voluntary repossession should be considered a last resort. It will negatively impact your credit score and stay on your credit report for up to seven years. If you’re able to pay off the loan, refinance the loan, or sell the vehicle, these options should be explored first.