A consumer can get out of a car loan by selling the car, refinancing, negotiating a new contract or turning the car over to the lender, according to Bankrate. A consumer who is willing to give up a car can consider allowing a friend or family member to take it and assume the loan, which requires approval from the lender.Continue Reading
A consumer also can sell the car to a private buyer and pay off the loan, notes Bankrate. Prices from a private sale typically are higher than if the car is repossessed and sold by a lender. In the event of a sale following repossession, the consumer is still responsible for the balance of the loan above the car's selling price, notes Bankrate.
Car loans sometimes can be refinanced, especially if the interest rate is high, according to Bankrate. Consumers considering refinancing should read current loan paperwork to understand any prepayment penalties, the method of rate calculation and other information. In some cases, lenders consider negotiating new loan terms without a formal refinance. Lenders are not obligated to change loan terms. If a lender does agree, terms should be provided in writing.
As a last resort, a consumer who is unable to pay a car loan can consider turning over the car to the lender, Bankrate notes. Before doing so, the consumer should negotiate with the lender and request that any remaining financial obligation be forgiven. Terms of an agreement should be provided to the consumer in writing.Learn more about Credit & Lending