Any advice on getting out of my car loan?

Loans
1

Hi everyone! I’m really stuck and could use some advice about my car loan. I don’t have anyone financially experienced to turn to, so here’s my situation:

  1. My car is valued around $17k-$18k, but I still owe $22k on the loan. Even if I sold it, I’d still be in the hole.

  2. My monthly payment is $505, and I’m currently out of work, making it tough to keep up.

  3. I was recently in an accident, so the car’s value is probably even lower now. It’ll cost about $3-4k to fix.

  4. My credit is already pretty bad. If I stop making payments, will it really make things worse?

  5. My husband and I can share his car for now.

Would it be smarter to just let it get repossessed, or is there another way to get out of this? Thanks so much for any advice.

2

If they repossess the car and sell it for less than what you owe, you’ll still owe the bank the difference. It might be better to sell the car and take out a small loan to cover what’s left of the car loan.

3

Is refinancing an option? I wouldn’t stop paying entirely, since the bank could take you to court for it.

4

You signed a contract, so the bank is going to want their money one way or another.

5

Do you have gap insurance? If something happens to the car, like it’s stolen or damaged, it could help cover the loan balance.

6

If you were in an accident, your insurance should help with some of the repair costs. Selling the car and arranging a payment plan for the leftover amount might be better than a repo.

7

You could look into selling it and having someone take over the payments. Leasing might be a cheaper option than buying if you need another car later, but that depends on how much you drive.

8

Brigham said:
You could look into selling it and having someone take over the payments. Leasing might be a cheaper option than buying if you need another car later, but that depends on how much you drive.

Leasing is like renting a car with a down payment they call a ‘deposit.’ After a few years, you return the car and start the cycle again. If money is tight, consider a used car you can afford without a loan. Cars are meant to get you from A to B, and old ones do the job fine.

9

Is the loan just in your name? Defaulting could affect both of your credit scores if you and your husband are cosigners. Refinancing might help if you use his credit. And if you only have liability insurance on the car, consider getting full coverage while paying off the loan.

10

If they repossess the car, your credit will take a big hit, and you might have trouble getting a car loan later. You could also look into if your insurance will cover some of the accident costs.

11

Filing for bankruptcy could help get rid of the car loan.