"What do I do if I am financing more than I can afford to pay for a car loan? "

"I went to the dealership to get a newer car. I am 19 and have no credit, so my interest rate ended up being 20%. The monthly payments are not bad, but the interest puts me at a total cost of $14,000 for a $9,000 car.

I am regretting the decision now and know that I have to get out of these payments as soon as possible. What should I do?

"

Answer
“This is a tough situation to be in. If your loan does not have a prepayment penalty, you can probably save on your total cost by paying the car loan off early.
If it does have a prepayment penalty, you will have to pay the interest charge you agreed to or risk losing the car to the bank, which will mess up your credit.
After you build your credit, you can try to refinance the car at a lower interest rate to lower your monthly payments, but this will likely only help you save a few dollars each month and it will add to the total cost of the car.
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Johnny Puckett
Answered on May 11, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
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