Getting Out of a Car Loan
People find themselves wanting to get out of a car loan for many different reasons. For example, a borrower may discover that he or she was overcharged for the initial car loan and that he or she will ultimately pay far more than the car is worth. Clearly, this is not a good situation. Often this is seen when a dealer or lender has victimized a borrower with bad credit. No one wants to end up in this situation, and this is one of the key reasons that it is important to work with a respectable lender and consult car loan services like Car Loans Canada.
Regardless of the reason that you need a car loan, it is vital that you approach the process carefully and with a degree of thought and patience. The result of failing to do so can be quite painful. If you do find yourself in a simply terrible car loan, don’t panic, as there are steps you can take. Let’s look at a few of the more common options.
Look Into Refinancing Your Car Loan
- Decide whether or not getting out of your car loan entirely is necessary. Once you have looked at your finances, you may discover that you can get by with paying $50 or $100 less each month.
- Taking a moment to check your current loan to see if there are any prepayment penalties is very important. You might discover that part of your bad auto loan is a painful prepayment penalty!
Try to Negotiate a New Payment Plan with Your Car Loan Canada Lender
- This part of the process begins by taking a good look at your finances and outlining your expenses.
- In part two of this plan, show your lender your paperwork along with your payment proposal. In this way, your lender can see that you are studying and thinking about your current financial situation.
- You should approach your lender about changing the terms before you have missed payments in order to avoid repossession and damaging your credit score.
- Communication is key. This means that you should invest the time to talk to your lender. Let the lender know that you want to work something out instead of having your vehicle repossessed. In fact, some lenders of car loans in Canada will even tack on missed payments to the end of your loan term just so long as you make future payments on time.
Maybe It’s Time to Sell Your Car
- Ultimately, you may have to sell your car yourself. You might be able to turn over your loan payments to a relative or a friend. Just remember that the new owner will have to be approved by your lender.
- Consider selling your car privately rather than having your dealer repossess and sell it. Keep in mind that if your dealer repossesses your car, he or she may sell it for a low price, and you can be left owing the remainder of the loan! Ouch!
If All Else Fails-Hand Over the Vehicle to the Lender Yourself
- This is definitely not your first option; however, if you have no other choice, simply hand over your vehicle to the lender yourself. This will save you on the cost of repossession as well as towing and storage.
- Work with your lender to negotiate the remainder of the loan. It may be possible to arrange a more favorable pay off amount.
Above all else, keep calm and think of ways that you can keep the impact on your credit score at a minimum. Remember, you will need to reapply for a car loan at some point!