What's the best way to get out of an upside-down car loan?
I'm about $5,000 upside-down on my car loan, but I want to refinance. How can I get out of this situation so I can refinance my car?
I’m sorry that’s happening—but you’ll be happy to know that being upside-down on your car loan by only $5,000 isn’t all that bad, as some people can get into the tens of thousands of dollars. The best way to get out of an upside-down loan before anything else is to keep making payments on your car loan.
You don’t want to hurt your credit or accrue more interest by paying late out of spite or frustration, so keeping up with payments is an important first step. The next steps are:
- Making as many payments toward the principal as you can, including every spare dime in your pocket or quarter you find in the couch.
- Possibly refinancing the loan, if you can find a lender willing to do so, although this might be difficult while you’re upside-down.
You can also sell the car, but that wouldn’t absolve you of the $5,000. But you can get a new loan with a principal of $5,000 rather than the remaining principal before you sold it, which can make the payments far more manageable.
If you decide to make more payments as a way to get out of an upside-down car loan, you should look for ways to save. One easy way to save is to review your car insurance. To do this easily, check out theJerry app—we’ll get you personalized quotes from top providers, so that all you need to do is pick the plan that works best for you. And once you pick one, we’ll help you switch!
Best of luck with your loan!
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