I have two cars. I’ve been paying for one on time for 20 months. I just got the other car last month. But my wife was laid off, and with the insurance and monthly payments, I can’t afford it anymore. I was told by the dealer where I bought the new car to call the bank that financed the first car and have it take the car back. My credit is already shot. Would this make it any worse? After they take the first car back, am I liable for the balance? I just want to get the first car off my hands. Help!

Yes, you’re liable for the unpaid balance on both loans. And if you don’t have the money, yes, that could hurt your credit rating.

The only wiggle room you might have is whether to get rid of the first or the second car. Run the math, and see which is worse on your pocketbook. Assuming both cars were financed through a loan rather than a lease, the question is: How much will either of them bring from a sale versus how much you still owe?

Chances are pretty good that you owe more on both loans than the cars are worth. If that’s the case, you have to decide which one will generate the bigger loss.

Still, it’s at least theoretically possible that you could sell one car for enough money to pay off the loan on that vehicle, especially if you made an extra-large down payment initially or if you have a car that’s exceptionally good at retaining its value.

If the cars are leased, there’s not much you can do about it. You can’t sell them, and if you return them before the lease expires, you’ll incur penalties. The penalties should be spelled out in detail in your lease agreement.

I would observe that the dealer who sold you the newer car is advising you to get rid of the old one. He almost certainly made some profit as a middleman for arranging the financing. If your loan defaults within a short time, he may have to pay the lender back some of the profit he made. It’s in his best interest to keep you in the deal.

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