Getting out of a Bad Car Loan
People with bad credit are always being targeted by marketers with ads that have words along the lines of “No credit? Bad Credit? No worries!”. It is a tactic used by marketers to convince people with bad credit that they can afford a shiny new car.
A person with bad credit is a person who has a credit score which is below 600. These people are targeted because they have shown marketers that they do not make good financial decisions. If you have been swayed in the past by marketers into making questionable financial decisions, do not fret. All isn’t lost. Here are a couple of things you can do to get yourself out of a bad car loan.
Don’t fall into the trap of rolling over your loan balance into a new car loan. There are many offers that make the bold claim of paying off your old loan if you buy a new car. These offers are tempting. In reality, what happens is that your old loan balance is rolled into your new loan. What you end up with is even more debt than when you started.
If you do some careful digging, you might be able to refinance your original loan. This might be able to reduce the interest you pay. If your credit is poor, expect to have a hard time qualifying for a decent refinancing offer.
If you can’t find a lender willing to refinance your loan at a better rate, consider renegotiating the terms of your loan with your current lender. You might be able to shorten the term of your loan if your lender isn’t willing to change the interest rate.
If all else fails, you always have the option of selling your car. This is the worst-case scenario where you cut your losses. When you sell the car, you’ll be in a much better position to pay off the bad auto loan. After paying off the loan, you can shop around for a cheaper car or even buy a used car.
Bad loans make it seem like all the walls are closing in. However, there are options you can take to dig yourself out of this deep hole. Your best bet is to talk to someone with a solid financial background about your options.