2 car loans could kill your credit
Dear Driving for Dollars,
Several years ago, I bought a 2003 Ford Excursion in my name but gave it to my nephew to drive so long as he made the payments. Recently, he couldn’t pay for it so he gave it back to me. Now, I’m overwhelmed in car loans and insurance, and the car is worth less than I owe. How can I get out of this without ruining my credit?
It won’t be easy and you’ll probably need to take a financial hit, but that’s a better option than ruining your credit. It sounds like the Excursion is an extra car, so your best bet is to sell the car that’s worth the most (or is closest to the balance of the car loan) and keep the other one. Sell the car privately using your local classifieds or online classifieds such as AutoTrader.com; clean it up nicely and pull together the maintenance records to help it sell quicker and for the highest amount possible.
If you must keep the Excursion, then call your lender and ask if the bank will change the terms of your car loan to reduce your payment. Keep in mind that you will most likely end up paying more in the long run if you take this approach. If your financial situation improves later, do what you can to pay down the car loan quicker. Because insurance costs also are an issue, consider some tips from Bankrate to reduce the insurance coverage if you continue to drive it. Another alternative is to stop driving it, unregister it and drop the coverage entirely as long as you have a secure place to store it.