How To Get Out of a Bad Car Loan

Feel like you are stuck with your bad car loan? Paying more for your Car Loan than you think you should be? The Good News is there are ways you can get of a bad car loan.

Here are 5 ways you can get out of a bad car loan in 2022.

1. Pay Off the Car Loan as fast as possible

It may hurt you to hear this but the first way that you should look to get out of a bad loan is to try to pay off the debt as fast as possible. Reducing your debt is never easy, that’s why you don’t want to keep the debt continuing and gaining more and more interest every month. The faster you pay off your loan, the less you will pay, it’s that simple.

Before you consider paying more off your loan, it is important that you speak with your current lender to understand their repayment terms and conditions. Some lenders may charge you more in fees and other associated costings for paying off the loan earlier. The benefit of paying off your loan as fast as possible is you won’t impact your credit score or lendability when you go to apply for new loans in the future.

2. Re-finance the loan

We get it! Paying off your debt as fast as possible is hard, sometimes impossible with your other financial commitments. The second and arguably the best way to get out a bad car loan is to re-finance your loan with another lender.

Refinancing is the process of replacing your current loan with a new loan. The new loan may have different terms conditions and rates than your current loan. To get out of a bad car loan, shop around, see what other lenders may be offering and see how you can go about re-financing and switching to a better loan option. There is an abundance of lenders available in the Australian Market, some of which are offering ridiculously low rates that could save you thousands over the lifetime of the loan.

3. Sell the Car

If you feel like you are stuck with a loan and want to write off the debt, there is the option of selling your car entirely. The benefit of selling your car entirely is it gives you the ability to pay off the debt entirely and move on with your life.

Before you consider selling your car it is important that you understand the current market pricing for your vehicle, and you price the car appropriately. Sometimes you may need to make a small loss on the sale of your car to get out of the bad loan.

4. Trade In the Car

Another way that you can reduce or get out of a bad loan is to trade in your vehicle to a dealership. When you trade in a car to a dealership, they will pay you an amount for the vehicle asset which in turn can be used to pay down your current borrowings.

As an added benefit, trading in your vehicle may also help you get another vehicle at a much cheaper price. Before you consider trading in your vehicle it is important to shop around for the best deal.

5. Voluntary Repossession

The last option you have to get out of a bad loan when all other options have failed is you can enter a voluntary repossession. If you cannot afford to pay your car finance loan or are about to default on your loan, you have the option of taking the vehicle back to the lender or dealership from whom you have bought the vehicle from – a vehicle repossession.

Once you voluntary repossess your vehicle you will remove the loan and not require any more future payments as the collateral has been taken away. It is important to know that doing a voluntary repossession will impact your credit score and lending ability for any future loans you may look to apply for.

Final Word,

Being stuck with a bad car loan is not a nice feeling. Fortunately, there are ways to get out of your car loan. The 5 options presented above are a few ways you can get out of a bad car loan in 2022.

We hope you enjoyed reading this article. To read more articles like this, please visit the Shop for Cars latest news page here.

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DISCLAIMER: This is all based on opinion please research and consult with all relevant parties to make the best loan decision.

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Jeal