How can you get out of a hefty car loan?
Dear 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?
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