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Is it possible to cancel a car loan agreement?
I just bought a new car last week, and I fear that I’ve made a mistake. I’m really worried that I won’t be able to afford my car payments. I'd like to return the car to the dealership—is it possible to cancel a car loan agreement?
Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Unfortunately, you can’t cancel a loan agreement once it’s taken effect, but you do have other options, like:
- Refinancing your car: Even though you just purchased your vehicle, you might still be able to find a lower interest rate, resulting in a more manageable payment.
- Removing any unnecessary coverages from the loan: If refinancing isn’t an option, try eliminating any extras added to your loan. Add-ons likegap insurance, towing, and rental car assistance can add up and increase your monthly payments more than you realize.
- Selling the car: Go back to the dealership and explain the situation. See if you can sell the vehicle at or very close to the loan amount and get a less expensive car with a lower payment. You can also try to sell it privately for the same value as your loan.
Remember: No matter which option you choose, time is of the essence!
The longer you keep the car, the more it will depreciate in value, which means you could go
upside down on your loan
—and the likelier it is your car may be repossessed. If you’re not able to make your car payments, reach out to your lender and or the vehicle dealership to discuss your options.MORE: How to refinance a car
View full answer
- Gregory R.
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