Can I Give My Car Back to the Dealer?
It’s generally not possible to return a financed car without penalty, let alone return it at all. You may get lucky and find the dealership you purchased from has a special return policy. Most of the time, this isn’t the case, but you can always give the dealership a call and ask. When you choose to finance your vehicle, the title has a lien on it that names the lender as the lienholder, giving them ownership rights that prevent you from selling until you have paid off your loan.
The lien, a form of security interest for the lender, is removed once you have paid off the loan. You can sell privately or to a dealership to pay off the loan before the term is over. It can be relatively simple to pay off the loan if you sell your vehicle to a private party, but if there is a remaining balance, that will come out of your pocket.
There are options to get out of a loan and get another vehicle, even if you find yourself with negative equity, meaning you owe more than the vehicle is worth. If you find you are asking, “can I give my car back to the dealership?” then it’s time to figure out your options.
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How to Give Your Car Back to the Dealer: Rolling Over Your Auto Loan
One option to return the financed car without penalty is to roll over the loan. This means you will continue to repay the remainder of your auto loan while paying out on the next one. Whatever remainder is left on your loan, say you have $5,000 left to pay, and you get a loan on a new vehicle for $16,000, these loans will be combined, making your loan total $21,000. So, can you return a finance car back to the dealer? Yes, but it puts you in a place of negative equity.
This situation can lead to what’s called the trade-in treadmill and could end up costing you a lot of money. It’s also a difficult situation to get out of and should be avoided unless necessary.
Can I Give My Car Back to the Dealership? The Last Resort.
When you have run out of options: you can’t sell to a private party or dealer, and you can’t roll over your loan, then voluntary repossession may be your last resort. It is classified as a repossession on your credit report. When you return the vehicle, you are defaulting on the loan. The car can then be sold at auction and used to pay off the remaining loan balance. If that doesn’t cover the loan, then you will still owe the lender. This option is a last resort as it could make it difficult for you to get another vehicle for at least another year.
Can I Give My Car Back to the Dealership? Alternatives
If you can’t afford your car payments but want to keep the vehicle, consider refinancing. Once you have had the vehicle for one year lenders will typically consider your loan. This is the process of replacing your car loan with another one. This can allow you to get better loan terms and make it more affordable. You can extend your car loan to lower monthly payments or even get a lower interest rate.
It’s important to be aware that in this case, you will want to stay on top of your loan payments. Late or missed payments can work against you for refinancing.
Get a New Loan
It can be difficult and frustrating to get out of a loan or return a financed car without penalty. If you need to finance your vehicle, even if you have a low credit score, we are happy to help at Green Light Auto Credit. We work with a variety of dealerships to help get you the best loan option possible on your vehicle. You can research some of your options, like Financing a Car with No or Bad Credit, online. Contact us today to figure out how to optimize your loan situation.
