New loan could slash driver's debt

Dear Terry,
I'm currently paying 16.9 percent on a loan for a used '07 car, but I'm sinking fast in payments. I bought the car in October 2007 and am financing for roughly seven years.

I'm not too keen on keeping the car, so if I can sell it, that would be my best option. But at this point, I'm almost prepared to voluntarily repossess it. I'm still young and don't have many accounts open, but I don't know what to do or who to turn to.
-- Tara

Dear Tara,
You don't say what your credit is like or whether you're current on the car loan. If you're current, you should try to refinance your loan. For a 2007 model car, you should be able to get a loan for about half what you're being charged now.

But if your credit won't support a new loan, your best option would be to try to sell it and, if you can, cover the shortfall between what you owe and what the car is worth.

Here are this week's reader questions:

• Tax credit on hybrid not automatic • How can I get rid of my oversized car payment? • Can I get financing despite my low FICO score? • Do extra payments make sense?

If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.