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How can you get out of a hefty car loan?

Tara Baukus MelloQuestionDear Driving for Dollars,
My car loan has a 25 percent interest rate due to bad credit from a divorce. I want the car, but paying 25 percent is killing my budget. How can I get out of this car loan?
-- Chip

AnswerDear Chip,
The only way to get out of a car loan and keep your car is to pay it off. You could pay it off using savings or perhaps tap a home equity line of credit, or HELOC. If paying off your loan isn't an option, then you could try to lower the interest rate on your car loan by refinancing, but you may not qualify since you've indicated you have less-than-stellar credit.

To see if you are a candidate for refinancing, read Bankrate's story on refinancing a car loan when money is tight. If you don't qualify due to bad credit but you are a candidate for refinancing otherwise, get some tips on how to improve your credit score by reading Bankrate's story, "Fixing your credit before seeking a car loan."

Ask the adviser

If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

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