If the current market value of your car is lesser compared to the amount that you need to pay to the lender, your car loan is considered to be upside down. This situation is quite difficult just like having a bad credit. However, you don't need to be scared or feel alone since many people are also experiencing the same situation. You also don't need to worry since there are many options that could help you get out of this situation.
Keep the car
One of the most popular options that you could consider when confronted by the problems caused by an outside loan is to keep the car that you are financing until the loan term ends and the needed payments are fully paid. As much as possible, refrain from thinking that you are in the losing end since the value of the car is very low and you cannot sell it for a larger profit. Try to provide prompt payments each month until the loan is paid off for this would help you increase your credit score. By improving your credit score, you also increase your chances of getting better loan deals in the future.
Refinance
If you are having a hard time in keeping up with the loan's monthly payments and your credit score is high, you should consider refinancing. By doing this, the monthly payments that you would be paying will be reduced.
Trade it in
While you aren't really solving your problem, if your situation requires that you have a different car, you could trade it in on a different car, and transfer the balance of the loan to the new vehicle. To find a dealer that could help you accomplish this, you can complete the online auto financing application.
Pay it Off
If it's possible, try to find the money to pay the difference so you will be free from the loan obligations. In order to do this, you can borrow money from your closest relatives or friends.
Avoid this problem in the future
If you don't want to be in this situation again, there are a few things that you can do to make sure it doesn't happen.
Don't buy a car if you can't afford to pay 20% down. The down payment you provide is very important and this should not be taken for granted.Don't finance for more than 5 years.Don't commit more than 15-20% of your monthly income to a car payment.(Mike McTigue)
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