A car is a large purchase, and most people do not have enough money saved to pay cash for a new or used automobile. Hence, most buyers will use a car loan to help finance the purchase. Most of the time, this works out well. However, in some cases, you may find yourself in trouble when trying to make those car payments. Maybe you didn’t have a large enough down payment or the interest rate was too high. Whatever the reason, you find yourself in a position of no longer being able to afford your car payments, and you’re worried that you can’t keep paying much longer. So, if you’re wondering how to get out of a car loan, you’ve come to the right place. We’ll offer 7 tips in this article to help your situation and get out of that loan.

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How Does A Car Loan Work?

Before we offer tips on how to get out of the loan, let’s start with the basics. We’ll explain exactly how a car loan works so that you have a better understanding of your options. When you buy a car, you have two options. Either you pay for the car in whole with money that you have saved or you take out a loan to pay for it. A lender will allow you to borrow the money to purchase the car and make regular loan payments over time until the amount has been paid back, plus interest.

The lender also places a lien on the vehicle. This accomplishes a couple of things. First, you cannot sell the car without their consent because you technically do not own the vehicle until the loan is paid off. In addition, if you stop making payments on the car, then they have the right to repossess the vehicle. After repossession, they can choose to sell the vehicle to help recoup the amount that you still owed on the car. If they do not recoup the full amount, then you are still required to pay any difference that is left outstanding. Now that you have a general understanding of how car loans work, let’s dive into ways that you can get yourself out of one.


7 Ways To Get Out Of Your Current Car Loan

Believe it or not, there are several ways that you can get out of an existing auto loan. Some people may think that paying off the loan is the only way, but that’s not the case. While that is one option, you could also consider selling your car, refinancing the loan, renegotiating, or even a few other things. Just keep reading to learn the details about each method for getting out of your loan. You can use this information to determine which method is best for your personal situation and move forward with getting out from under that expensive loan.


Option #1: Sell Your Car To Auto Wranglers

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Selling your car can be a great way to get out from under the big monthly payments, especially if you are not upside down on your loan. If your car is worth more than you owe on the loan, you might even have some money left over after the sale to spend on some fun activities or other expenses. The way it works is this – you’ll sell the car and then use the money from the sale to pay off the loan. Then you’re free and clear from that debt! Of course, you need to inform your lender because selling a car with a loan will require their involvement as well.

If you decide to sell, then Auto Wranglers is the best way to go. Our process is fast and easy, so you could get the money to pay off your loan within a day or two. We’ll always pay you top dollar for your car, and that means higher than trade-in value at the dealership in many cases. Even if your car has some problems or is in rough shape, we’ll still buy it from you. Try getting someone to buy a car that doesn’t even run! Auto Wranglers will.

Plus, we can help you no matter where you are located. We buy cars all across the nation, so our service area will include your location as well. Since we always provide free towing and pickup, you don’t have to worry about any hidden fees when you use our process. You can get an instant cash offer for your car, and we’ll have the deal closed with money in your hand within a day or two. You might be curious how to sell a car with a loan. Give us a call, and we’ll explain the entire process to you.

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Option #2: Refinance Your Auto Loan

This can be a good option for getting out of your current loan in certain situations. Perhaps you got a high interest rate when you bought your new car. If your credit score has improved since the time you bought your car, then you can probably refinance your higher interest rate loan and get one with a lower interest rate and save money on your monthly payments and over the life of the loan. Even if your financial situation has not improved, you might still be able to refinance into a longer loan term and get a lower monthly payment.

In order to refinance, you’ll need to be current on your payments and still have a good credit rating. Ideally, the loan balance will be less than the current value of the car. Most banks are hesitant to refinance an upside down car loan, even for someone with a good credit history. Depreciation kicks in the minute you drive off the lot, so unless you were able to put a down payment on the car, many people are upside down for the first few years of a car loan. You’ll want the new loan amount to be 90% or less of the value of your car if possible to increase your chances of getting approved for favorable terms.


Option #3: Negotiate With Your Lender

Some people are not aware that this option even exists, but you can always attempt to negotiate with your current lender on your existing loan. You can negotiate several points in hopes of getting some relief from at least one option. First, you can try and negotiate a lower interest rate which will in turn lower your monthly car payment. In addition, you can ask for a longer term to help spread out the balance over a larger number of payments. This reduces the amount of each individual payment.

The negotiation tactics above typically work best when you are current on all your payments. If you suspect that you may fall behind on your repayment, go ahead and reach out to your lender. They will often work with you to grant a forbearance or grace period of 60-90 days until you can get your personal finances back in order. Credit unions are often more willing to work with you in this manner than banks. They may choose to tack on the missed payments to the end of your loan as a lump sum, additional payments, or even develop a separate payment plan for paying back the payments that were missed.


Option #4: Pay Off Your Loan

This one might seem obvious, but one way to get out of your car loan is by paying it off. There are a few ways that you can accomplish this. First, make extra payments if possible to pay the loan off more quickly. Some people choose to get a second job or a side hustle to make extra income so that they can save enough money to pay off their car.

While not always the best decision, some may choose to get a personal loan to pay off their car. While the interest on a personal loan is usually higher than an auto loan, you may be able to lower your monthly payment if you can get a longer term. However, be sure to read the fine print. You might end up paying substantially more interest in the long run just to get that lower monthly payment. You should almost never use a credit card to pay off an auto loan. Credit cards usually have very high interest rates, and they also charge high fees for late or missed payments. You could get even deeper into financial trouble going that route.


Option #5: Trade In Your Car For A Different Car

This may seem counterintuitive as buying a car was what got you into this mess in the first place. However, if you need a new car anyway, then a trade-in might be a good option. Notice we stress the word need – not just want a new car. Replacing your existing loan with a new car loan can lower your monthly payments in some cases. Plus, a new car includes a warranty that can save you some money on maintenance and repair bills versus an old used car.

This option is not usually a good choice if you have negative equity on your current loan. You’ll want some positive equity that you can use as a down payment on the new car. Make sure that you know the remaining balance on your existing loan as well as your car’s current value. You can use Kelley Blue Book or other industry guides as a reference for getting the value. When you trade in your old car, that positive equity will count as your down payment for your new loan. You’ll also want to keep an eye on your credit report so that you know how well qualified you are for the new loan. This allows you to make sure you are getting good terms based on your creditworthiness.


Option #6: Voluntarily Surrender Your Car To Your Lender

Maybe you’re wondering how to return a car you can’t afford. If you simply cannot make the payments on your car any longer, you can voluntarily hand over the keys to your lender. Once you stop making payments, they’ll come and get the car anyway, but this can help the process along. Voluntary repossession does still count as a repossession on your credit history unfortunately. However, it can save the bank some trouble, and it might make them slightly more willing to work with you.

If you voluntarily surrender the vehicle, they can attempt to sell the car to someone else more quickly. The faster they can sell the car, the sooner they can get their money back from the vehicle and release you from the loan. If they can’t sell the car for the amount that you still owe, you will still be required to pay the difference. While it might be a bummer that you’re not going to get your car back, this method is much more amicable than a forced repossession. This can also be an option if you are leasing a vehicle. You might have to pay an early termination fee, but you can generally return the vehicle and get out from under those high monthly payments.


Option #7: File For Bankruptcy

This should be your option of last resort. Filing Chapter 7 or Chapter 13 bankruptcy may or may not release you from your car loan. More than likely, you need a car to be able to travel back and forth to work. So, you might be able to work with the bankruptcy court to keep your car. The bankruptcy might be able to free you from other debts like credit cards or personal loans, while still agreeing to pay your car loan. If you do keep the car, you’ll have to prove to the court that you can pay the loan, and you must continue making those payments.



Many borrowers go out and get that new car loan, and then suddenly realize that the payments are a little higher than they can afford. So, what are they left to do at that point once they’re committed to the loan? We’ve explored several options here for getting out of a car loan. You should be able to find one option that works for you. One of the best things to do is simply sell your car to Auto Wranglers and use that cash to pay off the loan. We’ll make you an instant cash offer and come to your location and pick up the car. Whether you’re looking to get $500 for a junk car or several thousand for a good used car, we can help. Your headache and loan will be gone, and you might even end up with some extra spending money in your pocket. Give us a call today to get started.

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Does voluntarily returning my car to my lender show up on my credit report?

Yes, even if you voluntarily return the car to your lender, that is still considered a repossession that will show up on your credit report. However, if you show your lender that you are attempting to make the payments and are willing to surrender the car, they might be more willing to work with you on changing the terms of your loan or allowing you other options for repayment. This can potentially avoid some late payments, fees, and maybe even negative reporting to the credit bureaus.

How do you get rid of a car you owe money on?

You can sell a vehicle that you owe money on and use that money to pay off your car loan. If the sales price is less than the amount that you owe, then you’ll need to come up with the difference. Some people even choose to take out a personal loan to pay off the difference. If you cannot pay the difference in any negative equity in your vehicle, then your lender will not release the lien for title transfer, and you won’t be able to sell the car. The best way to sell a car you owe money on is by contacting Auto Wranglers so that you can get the best price. Depending on the amount of negative equity, you might also be able to trade in that car and have that amount added to the loan of your new vehicle.