How to get out of a high interest car loan
High monthly payments, high interest rates, and expensive insurance can make an expensive car loan drain your savings and eat up your paycheck. Being underwater on the loan or facing joblessness makes it difficult to know whether to refinance, sell, or surrender the vehicle without losing transportation completely.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
- 1Surrendering the car to the bankDid this help you?
- 2Selling the car through platforms like Carvana or CarmaxDid this help you?
- 3Refinancing the remaining loan for a lower paymentDid this help you?
- 4Cutting other budget expenses or picking up a second job to pay it off fasterDid this help you?
- 5Getting any available job or multiple jobs immediately to generate incomeDid this help you?
- 6Putting extra payments toward the principal to get out from being underwaterDid this help you?
- 7Cutting monthly expenses such as phone plans and insurance to free up cashDid this help you?
- 8Doing delivery or gig work like DoorDash and Amazon Flex for side incomeDid this help you?
- 9Driving the current car into the ground and saving up cash for the next vehicleDid this help you?
- 10Refinancing the auto loan directlyDid this help you?
- 11Checking local credit union used car ratesDid this help you?
- 12Shopping around with multiple lendersDid this help you?
- 13Making bigger payments to pay off the loan fasterDid this help you?
- 14Refinancing the loan once the loan-to-value ratio improvesDid this help you?
- 15Selling the car close to what was paid and taking out a small personal loan to cover the remaining balanceDid this help you?
- 16Keep the car and continue making the monthly payments until the loan is paid offDid this help you?
- 17Pay off the negative equity out of pocket to sell the carDid this help you?
- 18Trade in the car and roll the negative equity over into a new car loanDid this help you?
- 19Checking local credit unions or banks for auto loan refinancing optionsDid this help you?
- 20Making extra monthly payments toward the existing loan to reduce interest and pay it off soonerDid this help you?
- 21Resisting the urge to lengthen the loan term when refinancingDid this help you?
- 22Paying extra money toward the principal every monthDid this help you?
- 23Refinancing the vehicle later at a lower rate when credit improvesDid this help you?
- 24Selling the car to buy an affordable vehicle without paymentsDid this help you?
- 25Getting third-party gap insurance to cover the loan amountDid this help you?
- 26continuing to live with parentsDid this help you?
- 27focusing on education to earn more income laterDid this help you?
- 28making extra payments on the loan if income allowsDid this help you?
- 29Borrowing money from family or friends to pay off the loan and drop full coverage insuranceDid this help you?
- 30Paying the current loan aggressively to cover the negative equityDid this help you?
- 31Shopping around for multiple quotes from different dealers or selling private party to minimize the lossDid this help you?
- 32Refinancing the auto loan or taking a personal loan at a lower interest rateDid this help you?
- 33Pay off the balance of the loan using saved cash while leaving a smaller emergency fundDid this help you?
- 34Throw extra money each month toward the principal balanceDid this help you?
- 35Shop around for cheaper vehicle insuranceDid this help you?
- 36Trade the vehicle in for a different truck or carDid this help you?
- 37Increase income through working more hours or finding a higher-paying jobDid this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“I regret the financial mistake and will never finance another car after this . . Should I surrender the car? I don’t have much emergency savings to buy another car if I sell it . Any advice would be helpful . It’s eating up my paycheck not including the $290 insurance it comes with/premium gas”source ↗
“I bought a vehicle at the height of interest rates. I’ve paid almost all of my other debt off since.”source ↗
“i am pre approved for a personal loan with a rate about 3.5% lower than the car note.”source ↗
“is this a good idea? or even allowable with a personal loan?”source ↗
“Stuck with a $459/mo, 22.59% APR car loan ($10k left) & currently job hunting. Need advice on how to navigate this.”source ↗
“The car interest is crushing me, and the vehicle is underwater by about $4,700. I am trying to prioritize getting a job, but I feel completely stuck on what to do with this vehicle note.”source ↗
“Is refinancing even an option with a 650 credit score and $4.7k negative equity, or do I need to secure employment first?”source ↗
“What are my best options to mitigate this car debt so it doesn't drain my savings while I finish my degree?”source ↗
“I feel stuck. I really want financial stability to some extent, but I just don’t know where to start period.”source ↗
“I recently decided to leave my company and am wondering what the best way to handle the vehicle I purchased is, now that I will no longer need it and my reimbursement checks will stop.”source ↗
“I am mostly curious about what to do with the remaining balance as I do not want to spend $5k-$9k just to pay it off.”source ↗
“Right now, my car is costing me quite a bit every month, and I'm starting to wonder if it's worth keeping.”source ↗
“That puts me at more than $1,000 per month just to keep this car, not including maintenance, repairs, registration, etc. I currently owe a little over $15,000 on the car, but I recently got an offer from carvana for around $9,500.”source ↗
“My thinking is that if I can get out of this car and purchase something cheaper without financing, I could eliminate the $500 monthly payment, lower my insurance costs, and possibly reduce my gas expenses.”source ↗
“i owe more on it than it’s worth. is there literally anyway to fix this or am i legit doomed.”source ↗
“I would like to get a lower interest rate than what I’m at now and I know refinancing is a solution to that.”source ↗
“Since it was my first car we went with what was good at the time”source ↗
“I'm essentially trying to figure out what I can do to get out of a car loan I'm stuck with.”source ↗
“I've tried selling it, but it's tough to find a buyer willing to pay that much for a 10-year-old Civic.”source ↗
“I know I’ll never catch up on negative equity that this car has and don’t know if I can even trade it in because of that I really just don’t know what to do”source ↗
“Did I screw up or is there something I should push for in the future to make it less of a screw up.”source ↗
“Should I re finance a new vehicle after a year or two is my main question.”source ↗
“The Tacoma is taking up about close to 30-40% of my monthly income. I put 8k$ down on it. I have had it for about a year and I have 16327$ left to pay off. Insurance and truck payment together are like 575$ a month. I know how reliable Tacoma‘s can be, which is why this is the hardest decision I’ve ever had to make. I have 30k$ saved up from college but I don’t wanna blow 16k$ on paying off my truck until I’ve had it for like a few more years.”source ↗
Where this came up
People with this problem also raised
- 45How to pay for unexpected expensive car repairs when broke
- 5What to do about car loan debt after a totaled car without full coverage
- 2How to get out of a car loan on a broken car
- 4Why does a normal car payment take up so much of a modest salary?
- 5How to get out of an expensive car lease you can't afford
- 2Which car should I sell to pay off debt?