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?

Answer
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.
Eric Schad
Answered on Nov 16, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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