How to Get Out of an Auto Loan

Buying a new or used car is a huge financial step. Sometimes, even if you plan ahead, you may run into hardships or find you no longer want the car you financed. Fortunately, there are ways to close a loan early and move on, so you’re not stuck making monthly payments on a car you don’t want or can’t afford. Find out how to get out of an auto loan below!

Pay off the Loan

The most obvious solution, but the best if you don’t wish to refinance or sell your vehicle or you want to remove a cosigner from your auto loan. If you have the funds available, check your loan agreement for any penalties to paying off the loan early. In some cases, you may be responsible for the principal plus interest, even if you plan to pay off the loan before its term is over. Contact your lender to learn more about the amount required to pay off the loan, and they’ll give you a pay-off quote that’s valid for about one to three months.

If you don’t have the amount quoted for a pay-off, consider whether early repayment is the right option:

• Will you save any money in interest by paying the loan off early? If not, consider sticking to making monthly payments.
• Contact your lender and ask about making additional payments to bring down the principal balance, and see if there’s a limit to how much you can pay monthly.

Refinance Your Car

If your credit score has improved since you took out your auto loan or your score is above 640, you may be able to refinance. The next step is time-consuming, but necessary if you’re convinced this is the right choice. Apply for refinancing with two to three lenders and provide information about you, your car, and your loan. Compare your offers to find the right refinancing opportunity for you.

• Choose the offer with a higher payment and lower interest if you want to save money on the loan and pay it off as quickly as possible.
• Choose the offer with a lower payment and higher interest if you’re trying to cut down your payments on a monthly basis.

Sell Your Car

If you have access to other forms of transportation and can live without your car, put it up for sale as a private seller or take it to CarMax. After you find a buyer, contact your lender and transfer the remaining loan balance to the new buyer. If you sell to CashMax, you may get an offer that’s more than what you owe on your loan. They’ll pay off the remaining balance and provide you with a check for the difference. Keep in mind: if you sell your car for less than what you owe, you’ll be responsible for the remaining balance.

Get More Information from Green Light Auto Credit!

Do you have additional questions about how to get out of an auto loan, deferring loan payments, or are you looking for good, bad, or no credit financing? Contact us at Green Light Auto Credit for answers.

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