How to Get Out From Under a Bad Auto Loan If You Already Have A Bad Credit?

October 28, 2019 at 8:21 am by Shirley Mitchell | Posted in Financial Planning

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All of us make some mistakes. Either we are having a problem to make bill payments, mostly auto loans and in search of a way to move out from this burden. Irrespective of the way you got into a bad auto loan there are some ways of getting out of it.

Refinance An Auto Loan: 

If you are having a problem that you availed an auto loan with a very high rate of interest, because you had a low credit score or you did not search around properly as you could have done, you must refinance your auto loan. If you are having an auto loan, it repays to check occasionally that you are however be offered the best deal that is possible on your auto loan. If you refinance with a new money lender, it can aid your credit history if you missed payments on the auto loan. You can become creative, refinancing the owed amount and then flipping it into a new auto loan. You will be beginning with a healthy account. Remember that if you miss a payment, your present lender will already have reported some negative details to the credit bureau. Those details will be staying on your credit report for almost 7 years, even after your account is closed. You can also refinance your auto loan if you wish to change the loan duration. For instance, say you that you originally availed an auto loan of 3 years, but the repayments are very high. You can refinance with a loan of 4 or 5 years instead. If you refinance an auto loan it is always a great financial decision than availing a new car for getting out of the loan. You usually need to pay some fees for refinancing but you avoid to pay sales tax on any new car and you also avoid the desire of buying a very costly car, just to move out of a bad auto loan. Ensure that you research well before refinancing an auto loan. 

Renegotiate An Auto Loan: 

If you only require some help to get back on track or make your repayments more inexpensive, you can converse with your present lender. They can offer temporary hardship forbearance in specific circumstances that means they will let you have some additional time for catching up. They will aid you by increasing the loan term so that your repayments are much lower. Become aware that if the loan term is longer you will have to pay more overall interest before your auto loan gets cleared off. 

Clear Off An Auto Loan: 

Do you wish to keep your car? Then lookout for some way of paying off your auto loan. You can have savings that you may use if it can be done without jeopardizing any urgent fund or other goals. Do not take out money from your retirement account. This is because you can owe a large penalty, as well as taxes to the Internal Revenue Service and moreover retirement funds, are only for retirement. You can sell investments or any other vehicle to repay your loan or work some additional hours. If all you can do is make some additional repayments on the principal each month, you will be paying off your auto loan very fast and save a notable interest expense amount. If you do not wish to keep the car, for instance, if your household is having two cars and can go along with one, you can sell off your car for repaying your auto loan. You will be getting the best price if you will be selling the car on your own. You must gain too much from the car sale for paying the auto loan or else yourself come up with the difference.

Declare Bankruptcy

If because of your financial issues you are unable to repay your bills and you are unable to find any way out of your debt, you should consider bankruptcy. It will actually assist you to keep your car, which may be vital if you require it to get to some work as well as earn your living. Declaring bankruptcy and filing for it will not get you out of an auto loan. You need to continue your auto loan repayments for keeping your car during bankruptcy. But filing for it will give you some relief from the collection efforts made by other creditors. Thus it will easier for you to continue with your auto loan repayments. Reaffirming your debt is essential if you wish to consider bankruptcy and also keep your car and auto loan. By doing this you actually promise that you will repay your auto loan as if you have not filed for any bankruptcy in return of keeping your car. You need to show that you are able to make repayments and your car is necessary. Your ability to keep the car will be depending on your equity in it as well as your state law. If you reaffirm your debt, but somehow fail to make a repayment, you will still lose your car. You can also surrender your car if you declare bankruptcy. This will wipe out all your debt. You can only keep the car until the bankruptcy gets finalized. Select a path that will lower your interest expense and overall debt. Avoid any decision that will affect your credit report. Your long period financial health will depend on availing a longer-term outlook as you will decide on the perfect way of getting out of a bad auto loan. 

 

Shirley Mitchell

Welcome to SOE 2013, I am Shirley Mitchell. Financial Strength is the cornerstone of our success.

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