Thursday 1 June 2017

How to Get Rid of a Upside Down Car Loan - Tips for Upside Down Auto Loan for Low Income Families

How to Get Rid of a Car Loan

A car loan can be a true burden, especially when you aren’t in a comfortable financial situation already. 

But when you are upside down on your car loan is when things get especially tricky. This principle can get you into financial trouble, debt and the complete inability to pay for your car.

We’d rather avoid these sort of situations, which we’ll be given you tips for. But sometimes you’re already deep in it, then too is there is still possibility to get yourself out, and we have some action steps for that too. 

So, continue reading if you want to know how to get out of an upside-down car loan.

What is an upside-down car loan?

Before we’ll be solving problems, we need to identify our problem. Essentially an upside-down car loan is a car loan that is worth more than the actual car. So, you owe more money than the worth of your car.

Having an upside-down car loan isn’t necessarily a problem, but it can become one. As soon as you’re struggling with paying off your car loan, or in your financial trouble, having an upside-down car loan is a great burden. 

When in debt you might want to sell your car to pay off the debt, but this won’t get you anywhere when you’re in a upside down car loan. You can sell your car, but you’ll still owe money for the car.

Another issue might occur when you’re buying a new car while you were in an upside-down car loan on your last car. You may have sold your old car but you still owe money for it, and with your new car, you now have to pay off two car loans! 

And don’t think this isn’t going to happen to you as 27% of all car sales in 2014 were made to people who were in this exact position.

How to prevent troubles with your car loan

‘An ounce of prevention is worth a pound of cure’ Benjamin Franklin once said. And even though he was talking about your health, the same principle works here.

·         Make a down payment of at least 20%, but pay the entire car in one go if this is possible for you. Handling this rule will also prevent you from purchasing a car you actually can’t afford.

·         Pay the car loan off as fast as you can. This will prevent you from paying tons and tons of interest. Plus, you won’t have to carry the burden of a car loan for as long.

·         Do your research before buying a car! Make sure you know what the car is really worth at the moment of purchase so you can avoid overpaying for your car.

·         Don’t go crazy on the car upgrades. Upgrading your car sounds great, but it won’t add anything to the value of your car while it does add to the amount of money you owe the company.

·         Maintain your car! This is the easiest way to keep its value as high as possible and prevent you from going upside down on the car loan

·         Don’t buy a new car before you paid off your old one. This one might speak for itself but we saw that for 27% of car-buyers this is not the case. So, save yourself this trouble and pay the old off first

How to get out of an upside-down car loan

If you’re already deep down in trouble, then these prevention tips won’t work for you anymore. Luckily, we’ve got a plan that will tell you how to get out of a bad car loan

1.    Try to pay off the car loan as quickly as possible: Try raising the amount of money you pay towards the loan monthly.

2.    When you’re struggling with paying the minimum amount, then you could sell some of your things to make some extra money. When your debt is really bad then you might even want to sell the car. No, you won’t be out of the car loan completely. But it can still make a huge difference

3.    Find other ways to make some extra money. When everything else fails picking up a side job or trying to create your own side hustle from home can be a good way to put some extra money towards paying off your car loan.

4.    Move the balance of the car loan to a credit card. A credit card company can offer better interest rates than the car company. Some credit cards even offer an introductory interest rate of 0% This gives you some more time to pay off the debt

5.    Opt for debt help options: When your financial situation is at rock bottom you might want to consider debt settlement, debt consolidation or filing for bankruptcy.

How to Get Rid of a Car Loan

This was all you needed to know about how to get out of car finance, and the above-mentioned steps will help you get out of this situation as soon as possible. 

When you are still in a secure spot, make sure to follow the prevention tips and not get into any tricky situations.

Now I would like to ask you to share this article with anyone you think might need this information. It’s a big problem that many people are struggling with, some without even realising it. 

So, notifying people about this issue is important and we’d like for you to step in and alert people through sharing the article.

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