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How do you get out of an upside down car loan?
I’ve been struggling to make my car payments recently, and my lender informed me the loan is underwater. I’m not sure what that means, but I just want to be done with it. Can you get out of an upside down car loan?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
An upside down car loan means you owe more on the outstanding loan balance than the car is worth. Luckily, there are several ways to try to get out of it.
- Talk to your lender: Explain your financial hardship to the lender and see if you can adjust the terms. You might be able to double your payments to get out from under the loan faster.
- Refinancing: Shop around for refinancing options. You may qualify for alower-interest-rate loanor longer loan repayment period, either of which would lower your monthly bill.
- Lump sum payment: This may not be possible for you, but it’s worth considering. Find out how much you still owe and see if you can pay it all off in one fell swoop. Check with your lender about possibleprepayment penaltiesbeforehand though.
- Sell the car: You’ll need to speak with your lender first, but if they give you the all-clear, then you can sell the car and use the money to try and pay off the loan. If there is a remaining balance, you’ll have to pay it out of pocket, but you will get the most money from the car through a private sale.
- Trade-in: If you want a new car by chance, you can trade your current car in. Whatever you still owe on your current vehicle will be added to your new car loan. This is a slippery slope, however, as you’ll go straight back into being underwater on the loan.
If you’re looking to refinance your car loan, start your search with the
Jerry
app. You can compare quotes from multiple lenders without worrying about your credit history. Avoid the hassle of researching and sending documents to potential lenders. Jerry’s app instantly connects you with top companies and takes into account your specific financial needs to find a loan that best meets those needs. 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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