How do I get out of a bad car loan?

I have a terrible 19% interest rate on my car loan. I feel stuck. Is there any way to get out of a bad car loan?

Answer
Unfortunately, it’s fairly common for drivers to find themselves in bad car loans that charge high interest rates. Many people even stay upside down in their loans for a long time, meaning they still owe much more than their car is worth.
While you can’t just decide to back out of a loan, you can pay it off more quickly to avoid paying massive amounts of interest over time.
The key is to start paying down the principal. You can do this in several ways:
  • Pay a principal-only payment one or more times per month
  • Make a lump-sum payment toward the principal once a year
  • Double or triple up on payments each month
  • Round up payments to the next $50 or $100
Since your interest rate is so high, it’s likely that a lender won’t refinance you, but it doesn’t hurt to try for an auto refinance. Shop around for refinancing rates to see if any might work for you.
In the meantime, find ways to cut costs in your everyday living. Skip the Starbucks, eat in more often, and take a look at your car insurance policy.
If your car insurance rates are a bit too high, try comparing rates with Jerry. In just minutes, you can find rates from over 50 insurers to get the best rate for your coverage level.
Eric Schad
Answered on Nov 16, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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