How do I clear my car loan?

How do I get out of a loan? I am currently pregnant with my third child. My partner and I are considering purchasing a new vehicle to accommodate our growing family. I have an existing loan on my current car that is not paid off yet.

Answer
Congratulations—that’s exciting to be expecting!
Needing to accommodate a growing family is a common concern, so there are ways you can clear your car loan!
To start, check the value of your vehicle. Cars depreciate, so you’ll want to know its current value. You can use a resource like Kelley Blue Book or Edmunds to determine this.
From there, you can:
  • Sell the vehicle: If the value of your car is worth more than your loan balance, you can sell it to pay off the loan. Make sure you let your lender know that you are selling your car, as they may have certain requirements for closing the loan.
  • Transfer car loan: If the person buying your car is a family member or friend, you may be able to transfer your car loan. While banks and credit unions don’t always allow this, it never hurts to ask.
  • Trade in your car: Since you want to upgrade your vehicle, trading in your car is what most people do. When you trade-in a vehicle, the dealership will apply the trade-in value to your loan. If it doesn’t cover what’s left on your loan, they’ll roll your loan into your new car, which will clear your loan balance.
That said, this may cause you to be upside-down on your loan since you may end up owing more than the value of the new vehicle. Be sure to read your loan’s terms and conditions before signing.
When you purchase your new vehicle, you’ll need insurance. While you can add the car to your current policy, it never hurts to shop around with Jerry. A licensed broker that offers end-to-end support, the Jerry app gathers affordable quotes, helps you switch plans, and will even help you cancel your old policy.
Phoebe Mah
Answered on Nov 24, 2021
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