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If neither my wife nor I want to keep a car during a divorce, can we return it?
During our marriage, we bought a 2018 Prius, but now that we're divorcing, we can no longer afford to pay for the loan. Can we turn the car back in to the dealership for a cheaper one? What will be the implications for the loan?
Sophie Newman · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“If you’re both co-signers on the loan, you’re both responsible for the debt, no matter what you decide in your divorce.
The only exception is if you decide to refinance with only one of your names on the loan, but you would have to qualify separately.
You can trade the car in, or sell the equity you’ve invested in it, but you’ll still be responsible for the difference between the values of the loans. For example, if your loan is currently $20,000 and you get $15,000 from selling the car, you’ll still be responsible for the difference plus whatever the loan is on the new car.
Since you’re separating, it may be more straightforward to try to sell the equity you have invested and split the remaining debt. Talk to a lawyer or your financer about your options.
While it adds another thing on your plate (I know you already have so much to do), if you haven’t divided insurance policies, you should begin looking into that. You’ll likely want to get your own policy as a result of the divorce, and
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