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What do I do when I'm upside down on a car loan?

I bought a car when I was 19 and I didn't read the loan contract. My interest rate is 22% and I owe way more than the car is worth. What can I do to get out of an upside down car loan?

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
An interest rate of 22% is astounding, but youth brings a lot of lessons to learn. Hopefully, you can rectify the situation with a few steps.
First off, continue to make all your
car loan
 payments on time, even if they’re high. Adding a derogatory mark to your credit out of frustration or spite is never a smart move.
Consider using one of these strategies to pay the loan off faster:
  • Make biweekly or lump sum payments
  • Double or triple up on monthly payments
  • Round payments up to the next $50 or $100
  • Transfer the balance to a credit card if possible, as this may be cheaper than the 22% you’re paying now
  • Shop around to see if you can
    refinance the loan
    . Though unlikely, it’s worth a shot
  • Sell the car and get a smaller loan on a new, cheaper car. Be upfront with potential buyers about the car coming with a loan
To free up some extra cash to make your payments easier, see if you can find a
cheaper car insurance
 policy. Shop with
Jerry’s
 free quote comparison service to find the best rates without a hassle.
MORE:
How to get out of an upside down car loan
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