According to auto experts, we’re headed into yet another crisis as auto loan defaults are increasing sharply. There is, however, a silver lining, as experts don’t believe that the rise in auto loan defaults will lead to more repossessions.
If you’re currently struggling with your auto debt, then you may be wondering how to get out of a car loan with the least amount of collateral damage. The good news is that you have options regardless of how delinquent your loan is or how out of hope you feel. Learn more about your options for navigating your auto debt situation and avoiding car repossession below.
Renegotiating Your Loan Terms with Your Lender
One thing that most borrowers fail to consider when they start to struggle to pay off their auto debt is that they can attempt to renegotiate their loan terms with their lender. It’s in the best interests of both you and your lender to renegotiate when you’re struggling because if you fall too far behind and stop making payments at all, then your lender will have to waste time, money, and resources attempting to reconcile the debt.
One option is to renegotiate car loan interest rate fees, penalties, and more. By reducing the overall interest rate, you’ll save tons of money. Your lender will still receive the principal amount they gave to you as well as extra interest. They just won’t be making as high of a profit as they would have before. It’s still a good deal for the lender, though, because failing to renegotiate could mean that you default altogether, which would leave your lender footing the entire bill.
If you’re not sure what types of terms to negotiate, then talk with an auto debt service before starting the process with your lender. An expert can provide you with invaluable advice you can use in your negotiations.
Sell Your Vehicle and Transfer Your Loan
Another option is to sell your car to pay off loan debt, but you will need your lender’s permission first. Your lender may want to ask the new buyer to fill out a credit application to transfer ownership. Buying a car while in debt can be tricky, but you’ll be able to move on from your old auto debt and buy a more affordable car that matches your budget.
Look into Refinancing Options
Rather than renegotiate, you could also attempt to refinance car loan sums that you’re struggling with. Can you refinance car loan terms when you’re in default, though? The short answer is ‘yes’, and it doesn’t take that much time to do. Refinancing basically replaces your old loan with a new loan that has more favorable terms. This is a great option if negotiations with your lender fall through. You may have more options with refinancing because you can utilize new companies and lenders to your advantage.
Participate in a Voluntary Repossession
Rising auto debt problems call for unique solutions. If you know you can’t pay what you owe and you’re out of other options, then it might make sense to voluntarily give your car to your lender in exchange for clearing away your loan.
Transfer Your Lease
When you outright sell your vehicle, you might still be on the hook with your auto loan provider unless the cost of the car covers your entire loan. In these situations, it might make the most sense to transfer your car lease to the new owner or another person. This new owner will take on responsibility for the loan and the payments.
Find a Way to Pay Off Your Loan
Of course, the best way to get out of a car loan is to pay off car loan debt in full. This isn’t always possible, but if you make it a priority, then you’ll be able to make a huge dent in your debt. If you’re struggling, you might want to write a car loan settlement letter to your lender. This letter will outline your financial situation. It should also include some kind of offer where you agree to pay off a specific amount in exchange for forgiveness for the rest of your auto loan debt.
How to Get Out of a Car Loan
Unless you’re well insulated financially, you’re struggling with this year’s historic inflation rates, price increases, product shortages, energy crises, and the list goes on! Considering all the financial turmoil going on right now, it’s not too surprising that more Americans need to know how to get out of a car loan without breaking the bank.
Hopefully, one of the options on this list can help you find a solution, but if not, all hope is not lost. Here at United Debt Settlement, our agents have extensive experience helping individuals just like you find solutions to their car debt issues, and we want to help you, too. Contact us now to discuss your debt situation in more detail with one of our best agents.
Gabriel Gorelik paves the way for customer service and operations at United Settlement. He is passionate about numbers and holds a strong belief in helping anyone with their debt. Before United Settlement, Gabriel received his BS in Finance & Economics from Brooklyn College. After graduation, Gabriel went on to build his first financial services company where he managed thousands of accounts for business and consumer clients. He understands the importance of client satisfaction, professionalism, and exceeding expectations.