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How to Get Rid of Car Loan Debt

how to get rid of a car loan

Many of us have debt in something or the other. The problem arises when one is unable to handle any one of their debts. Paying off car loans may end up more expensive than the car itself and cause you to lose more than necessary in the long run. So this article gives some ideas to pay off your car loan as soon possible.

As an example, let us say that you owe two hundred and seventy five dollars every month for five years to pay for your car. You will not own your car till the next five years no matter how good it is. The thing to do in this case, is more sensible is to buy an older possibly second hand model outright. Sure it is older but you own it completely and you do not owe anybody anything. You can attempt to sell this car by placing an advertisement in some local papers or wider newspapers and may make some money in the process.

This way at least, your credit history remains unblemished and if you take a look at things objectively, you may realize that you do not need the car at all. If an older model will suffice, it is much better to have something that is your own and that does not drain your finances which can be put to much better use for the next couple of years.

Another thing that you can consider would to be check if is there someone else who can pay off the debt. Look at this way, a relative or a friend who needs a car but possibly does not have good enough credit or cannot come up with a down payment for it anytime soon. You cannot consider equity though. I mean you are in debt. This is a way out.

They keep the car at the end and all is fair.

If you do have too many years on your car to pay off, a voluntary repossession that is, allowing you car to be repossessed as a way of paying off your car loans is an alternative. Though many would not like to consider this because even though it is voluntary, it will strictly be stated as repossession and end up spoiling your credit report. Also when this happens, you as the owner have no say in the matter where the car is to be auctioned off and in the end will still be responsible for the difference in dollars according to different loan rates.

Many people do this as a ‘trade off’ where they allow their old car to be repossessed and buy a spanking new car and then resell that by allowing it to be repossessed again later. No matter what happens, their debt cycle runs in circles and in the long run may prove very expensive, should they decide to stop repossession. Not to mention the bad credit history that will arise.

Another way to ensure that you get out of car debt is to go to a counselor’s office to learn how to handle loans and make sure that you do not get into them to begin with. Buying a car that is older is a very good idea and by the time some years pass by you will most likely be financially stable enough to buy a new one altogether or at least be able to afford the monthly loan that you may have to pay on your spanking new car! So this is considered to be smart, sensible and objective and not emotional about getting a car to begin with.

Posted by Mike on February 20, 2009 in Money

Category: Credit

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