Auto Loan Relief Options: Explore your options

Sep 19, 2023   10 min. read

1. Refinance

You could consider Refinancing  the loan or  selling the car and using the proceeds to pay off the loan. If you have the cash available, simply paying off your car loan early could be the fastest way to get out of it. However, keep in mind that some lenders charge prepayment penalties if you repay your loan ahead of schedule. Refinancing also comes with the risk of higher interest rates.  If your credit has dipped or interest rates have gone up, you may find  interest rates higher than your current one. In the current market,  steep interest rates aren't uncommon. Recent Fed rate hikes have driven  interest rates up to record highs.

2. Surrendering or Voluntary Repossession
Surrendering & Voluntary repossession allows you to return a car you financed without  being subject to the full repossession process. A voluntary  repossession will remain on your credit report for up to seven years, but it's better than having multiple missed car payments and an involuntary repossession. Unfortunately, while the voluntary repossession remains on your credit report, you'll have a harder time obtaining a new auto loan. A voluntary repossession could have serious financial  consequences, including your account going into collections and your credit taking a hit. You may still owe money to the lender, and the lender may try to sell  the vehicle to make up as much of the remaining balance of the loan as  possible. In addition, a voluntary repossession could drop your credit score by  100 points because of late payment reports, which seriously hinders your  ability to qualify for additional loans. Before you decide to go for voluntary repossession, it's important to consider alternatives.

3. Trading in your Car

Trading  in a car with negative equity can be beneficial if you can find a vehicle that is less expensive and fits into your budget. However, you need to be careful, as you could go into greater debt and more negative equity. If you owe more on your car than it's worth, trading it in could negatively impact your budget. You'll  have to pay off the difference between the car's value and the amount you owe before you can trade it in. Trading in your car will also cause additional costs from dealer fees and interest rates

It's  important to note that the right option for you will depend on how much  your car is worth, how much you owe, and whether you’ve defaulted on  the loan. If you're experiencing buyer's remorse, you won't be able to simply return the car and back out of the loan agreement. 

There are no disadvantages to Auto Loan Relief's proprietary solutions! 

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