What are some good ways to get out of a car loan?

Answered by Car Loans Expert Jim on April 5, 2021

I'm really regretting getting a car loan for my Honda Fit. Is there any way I can get out of it?

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Car Loans Expert

“There are a couple of reasons why borrowers want to get out of a car loan. One is that they can no longer keep up with the payments. Another is that they owe more on their loan than their car is worth. Or they may find that they are stuck with a bad loan due to a high interest rate. Whatever the reason, there are a few options available to you if you’re struggling to keep up with a car loan.

If you are up-to-date on your payments but expect to have temporary trouble meeting your financial obligations (due to a job loss or some other calamity), call the lender. Ask them if they can pause your payments for a short period of time, or if they can modify your monthly payment to make it more affordable. They may say no, but it doesn’t hurt to ask.

Another option is to refinance your loan to land a lower interest rate or a longer repayment term. Both will lower your payment amount, but with the latter you’ll ultimately pay more over the life of the loan.

You can also consider selling your car privately or trading it in with a dealer. You may get enough money for it that you can afford to buy a cheaper vehicle.

Finally, you can opt to surrender your car voluntarily. This is preferable to having your car repossessed by the lender because it won’t hurt your credit as badly as a repossession, plus you’ll avoid any repossession-related fees.

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