5 Ways to Leave Your Car Loan
Cars are bad for the environment, and walking or riding your bike to work is healthy. Your car reminds you of your ex. There are plenty of reasons that you might daydream about being free of your car, but the biggest one is probably money. The average car payment as of the spring of 2023 is a whopping $729 per month. Being able to live without your car is probably a fantasy, since most people who have both a car and a job use one to get to the other. In many cases, it is possible to get out of your car loan without losing possession of your car. In other cases, the only way to ditch your loan is to part with the car, but that is better than sticking with a car loan you can’t afford and facing the credit score destruction that comes with defaulting on your loan. If you are in danger of defaulting on your car loan and need to think of a solution quickly, contact a Philadelphia debt collection abuse lawyer.
How to Get Out of an Unaffordable Auto Loan Without Default
Tara Seboldt of Clever Girl Finance has identified five ways that you can get out of a car loan if you are in a situation where you need to get out quickly or risk default. Each of these methods has its pros and cons, so you should think carefully about your general financial situation before you choose. These are the five options:
- Pay off the loan – If you pay the loan in full, you will no longer have to deal with a monthly car payment. You can do this by taking money out of savings or taking out a debt consolidation loan. If you choose the former option, you will not have a monthly car payment at all and can use the money to rebuild your savings. With the latter option, you will have a monthly loan payment, but it will be much cheaper than your auto loan.
- Trade in your car – If, by some miracle, you can find an affordable car for sale, you can trade in your current car for a different one. The trade in value of your car will probably not be enough to get you another car outright, so you will finance it. This means another car loan, but hopefully one with lower monthly payments than your current one.
- Sell your car – You can get more money by selling your car than by trading it in. Unless you don’t need a car to commute to work, though, you will quickly burn through the money you get from the sale. Selling the car is only a good option if your spouse has a car and you can adapt to being a one-car family.
- Refinance your car loan – This could get you a lower monthly payment, but you may pay more in the long term. It could also lower your credit score, but your credit score will improve as you continue to make payments.
- Voluntary repossession – This is where you give your car back to the bank, since it is collateral for the loan. It is much cheaper than when the bank repossesses it, but it might leave you with some debt related to the car loan.
Contact Louis S. Schwartz About Auto Loan Debt
A Philadelphia consumer law attorney can help you if you are struggling with car payments and need to find a way to avoid defaulting on your auto loan. Contact Louis S. Schwartz at CONSUMERLAWPA.com to set up a free, confidential consultation.