Do any companies refinance upside down car loans?
I have a massively upside down car loan with a high interest rate. Is there a company that will refinance my car at a more favorable rate?
When your loan is “upside down,” or costs more than the vehicle is worth, lenders consider it a high risk to take you on. If you default on your payment, the lender is left holding the bag on the car—which will result in a big financial loss for them.
Unless you have great credit and a high income, you likely won’t find a taker for a car loan refinance. To become eligible for a refinance, you should pay down the principal on your car until your remaining loan balance equals the value of the car (this is “breaking even”). To do this, try:
- Doubling up on payments each month
- Making a lump-sum payment every so often
- Making principal-only payments
- Rounding your car payment up to the nearest $100
By decreasing how much money you owe, you will increase your equity. Provided that you have good income and credit scores, you should find that a lender is willing to take you on once you’ve broken even.
Jerry offers an auto refi program for drivers facing a variety of financial situations. Your savings are our top priority—so while you’re at it, check out Jerry’s insurance comparison shopping tool to potentially save hundreds on your monthly premiums!
MORE: Autopay auto refinance
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