What if I can’t return a financed car?
If you can’t return a financed car, don’t fret — you still have a few choices if you’re struggling with your car payments.
Refinance the Car Loan
If you can’t afford your car payments anymore, you may have some luck with a refinance. Refinancing your car loan simply means taking out a new loan to pay off your existing loan. It often opens the door to better terms, such as a lower interest rate or a longer repayment period. Both options can get you smaller monthly payments — which may help alleviate some of your financial burden.
Get a Cheaper Car Insurance Policy
Often, car payments aren’t the only thing stretching your finances. The overall cost of car ownership can drain your bank account. In that case, getting a cheaper car insurance policy can help lower your out-of-pocket expenses.
Your lender may have insurance requirements you must maintain. For example, many auto loans require you to carry full coverage on the vehicle. But you can (and should!) shop around and switch car insurance companies to get a better price. Ask about discounts your insurance provider may offer, and increase your deductible to save on premiums.
Sell Your Car
If the dealer won’t let you return the car, selling it can offer financial relief without a negative mark on your credit report. However, cars can depreciate quickly. You may not be able to sell it for the total loan amount you owe, and you’re responsible for paying the difference.
Get Someone Else to Assume the Car Payments
You may have the option for someone else to assume your car payments. An assumed loan is when the loan is transferred from one party to another. You’ll need to work with your lender to make it happen. Most lenders require the buyer to meet a minimum credit and income threshold before letting you pass the loan on.
Involuntary Repossession
Voluntary repossession is when you surrender your vehicle by turning in the keys. But involuntary repossession is also an option. It seems easy enough: you simply don’t make any payments, and eventually, your lender decides to repo the vehicle. But it can be a nerve-racking experience and cause a severe drop in your credit rating.
File for Bankruptcy
You might consider bankruptcy as a last resort if you’re deeply in debt and have high car payments on top of it. However, it isn’t an easy process. Filing bankruptcy is often complicated and can tarnish your credit for a decade. Consider other viable options, take a good look at your finances, and contact a qualified bankruptcy attorney before going down this path.