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How can you get out of an upside down car loan?
When I financed my car, I didn’t have great credit. My interest rate was about 15%, so I’m upside down on my car loan. I want to refinance now that my credit has improved, but no lender will take on my loan because I’m so far upside down. How can I get out of an upside-down car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Getting out of an
upside-down car loan
takes planning and patience, but you can certainly do it! To get out of an upside-down car loan and gain positive equity, double up on payments each month or make additional payments toward the principal.If you want a more structured approach, consider these options:
- Make a quarterly lump-sum payment toward the principal.
- Double up on your monthly payments each month.
- Round your monthly payment up to an amount you can afford. For example, if your payment is $317 a month, pay $400 or $500.
- Make principal-only payments whenever you have some additional cash.
Once you break even on the loan–meaning that your loan balance is equal to or lower than the actual cash value of your car–lenders should refinance your car. Just make sure to take a look at your credit report and shop around for the best rate.
When you’re ready to refinance, be sure to shop around for the lowest interest rates. Try using
Jerry
to help you find the best deals. No matter what your credit score is, Jerry makes refinancing your car easy by comparing quotes from multiple lenders to find a rate that works best for you. On average, car owners pay $85 less every month by refinancing their auto loan.MORE: How to refinance a car
View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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