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Sometimes, a small debt can be overwhelming. What more if it’s as big as a car loan? Is it possible to get out of it even when you’re underwater on your auto loan? If yes, how?
Tips on Managing A Car Loan
When you’re a car owner and the amount you owe is bigger than your car’s market value, you might feel like you’re under a financial situation that’s hard to resolve, thus leaving you two options: continue with the regular repayments or selling the car.
If you’re torn between these options and you’re still thinking about other alternatives, here are four steps you can follow to determine the best choice for you.
Determine your negative equity by finding the difference of your car value from the amount you owe from your lender. If you’re not sure about the exact amount of your car, you can visit reputable websites that allows you to know your car’s estimated price.
For instance, your car’s value £15,000 and your loan balance is £18,000. It means that your negative equity is £3,000.
Talk to your lender and ask if there are other options, such as paying an extra amount every month. This will not only reduce your loan balance but also, will help you get out of debt faster. However, if the loan provider says there are no possible options, it won’t hurt to know the answer.
If you have good credit and your negotiation with the lender is not successful, you can refinance your car loan instead. Just be sure to get the right loan offer, which means a low-interest rate but a shorter repayment term. This way, you can pay the loan easily while ensuring that you can get out of the loan quickly.
While it’s best to keep your car if you can still cover the negative equity, it might be time to say goodbye to it if you have no options left. This is, perhaps, the only way to catch up with your auto’s depreciation. You can either sell your car on eBay, Craigslist, or other similar websites or trade in your vehicle.
If you’re wondering if you can sell a car with a loan on it, here’s the answer. If your car’s market value is bigger than the loan balance, then there won’t be a problem. However, if the existing finance exceeds the value of your vehicle, then you may have a hard time putting the auto in the market.
The same thing can happen when you trade in your vehicle and you have a new loan to take care of which exceed the value of the car you just purchased.
If you’re having a hard time getting out of your existing car loan, you might be able to find a solution using this common technique without putting damage on your credit record.
Putting The Car On The Market Yourself
Placing the car on the market yourself can be an exhausting job, but it can help you save money on the interest. In addition, you can decide to sell it at a higher price so you’ll have more cash to use on your existing loans and other needs. Here’s how to do it:
Find your car’s value using a reliable tool such as Parkers and state your auto’s real condition and value to determine its real price.
When putting it on sale, choose a price that’s a bit higher than what you’re asking so you can adjust the price when someone negotiated on it.
Figure out your loan balance and subtract it from the amount you will get after selling your car. The amount should be enough to cover the existing loan, otherwise, you may adjust your selling price or take out a new loan from a bank or credit unions.
Let your bank or lender know that you are going to sell your car and ask them how you can acquire the title.
Sell your car on eBay or other online sources or you can place it in strategic locations such as a gas station.