Options for Getting Out of a Car Loan

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - February 24, 2021

Bad credit borrowers have their own set of challenges when it comes to getting into a car loan. But, depending on your situation, it can be equally hard to get out of an auto loan. We have a few tips you can use to smooth your transition out of a car loan that no longer suits you.

Need Out of Your Auto Loan?

Buying a vehicle is a big deal, and try as you might, it can be hard to get an ideal auto loan every time you need new transportation. This is even more true if you're struggling with poor credit.

Affordability is a big reason many people end up trying to get out of their car loans, but it's not the only one. Situational changes such as a growing family, moving to a rural locale, or getting a longer commute, are just some of the reasons you may need to get out from under an auto loan. When you have good credit and equity, it's typically not hard to trade in your current vehicle for another one.

Borrowers with credit scores around 660 and below tend only to qualify for higher interest rates when it comes to getting a car, which can cause negative equity. Being upside-down on your auto loan complicates the process of trading it in for something else. If you’re looking for a way to get out of your car loan – negative equity or otherwise – there are ways to do it.

5 Ways to Get Out of Your Car Loan

There are several ways you can get out of an auto loan, and the one that works for you depends on the situation you're starting from.

  1. Refinance – If you want to keep your current vehicle, but can no longer afford your auto loan, refinancing might be an option. People typically refinance to save money on their monthly payments, either by qualifying for a lower interest rate or stretching out their loan term. However, there are a lot of requirements that go into qualifying, including a better credit score than when the loan was started. Your vehicle and the loan amount also have to be acceptable limits and these conditions vary by lender.
  2. Trade-in / sell to a dealership – If you need an auto loan that's more affordable and you don't want to keep your current car, you can typically trade-in your vehicle for something with a lower cost. How easy or difficult it is to trade in your vehicle depends on how much you owe your lender, and whether or not there's enough equity in the car to cover the loan amount.
  3. Sell privately – In some cases, due to depreciation, supply and demand, and a number of other factors, you may be able to get more for your vehicle if you sell it yourself rather than trading it in. If you get enough money to pay off your loan plus a little extra, you may even be able to put some cash in your pocket, too.
  4. Loan assumption – Loan assumption isn't very common, but it’s an option with some lenders. If you need to get out of your loan, but can't afford to pay it off, in some cases you may be able to have someone else take the vehicle and the loan off your hands. The buyer must qualify for your loan, they can't change any of the loan terms, and payments must be made on time.
  5. Voluntary surrender – If no one can assume your loan, you can't afford to keep the vehicle, and trade-in isn't possible, consider giving the car back to the lender. This is similar to a repossession, except that you're saving yourself extra by avoiding fees from the recovery and storage of your vehicle. Once the lender sells the car and applies it to your balance, you're responsible for whatever deficiency balance is left.

With any of these options, the ease with which you can get out of your loan depends a lot on how much you still owe, and if you're behind on your loan. In most cases, loan default leads to vehicle repossession, which can make it very difficult to qualify for the financing you may need again in the near future – especially if you're already struggling with poor credit.

Let Us Be Your Guide

It's possible to get out of your car loan if you need something more affordable, or your situation has changed and you're no longer in need of an auto loan. When the time comes to get another car we want to help. Here at CarsDirect, you can start your car shopping journey right here on our new and used car pages.

If you're not sure where to start because of bad credit, we've got you covered, too. We have gathered a nationwide network of special finance dealerships that work with subprime lenders that finance borrowers with low credit, no credit, and even bankruptcy. Don't wait any longer to make a move toward your car loan goals. Simply fill out our fast, free auto loan request form and we'll look for a dealer near you with special financing options!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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