How To Get Out Of Your Car Loan
Cars, whether theyre new or pre-owned are both a big responsibility and a big expense. There are many different costs to factor in, such as fuel, insurance, oil changes, repairs, tires, etc. Not only that, but youll need to consider other elements, like where youre buying the car from, what your warranty will cover, if any, and of course how youre planning to pay for the car in the first place. Depending on your current income and how expensive the car is, it can take years to finance completely, so its common for many would-be car owners to apply for a car loan.
A car loan, like any kind of loan, is a system that allows a buyer to pay off the total value of the car in monthly installments, making it more affordable. After all, very few people are going to be able to pay for a $25,000 car using a cheque.
However, when all the other car expenses are being considered, there are other factors that many people forget to take into account before applying for their loan, such as the cost of interest. They might be able to afford the loan payments initially, but something else might happen further down the road that makes paying more difficult. Loss of employment, decreased income and all manner of other financial emergencies might arise, making the car loan payments harder to afford. If this is the case, there are a couple of different ways of dealing with a car loan before it gets completely out of control.
Why Take Over An Auto Loan
Reasons to take over an auto loan vary by person. Generally:
- The original owner wants to move the vehicle but isn’t, for whatever reason, interested in privately selling or trading in the vehicle.
- The potential new owner needs a vehicle but doesn’t have the cash or good enough credit to take the traditional routes of buying a vehicle from a private seller or dealership.
Voluntarily Surrender The Vehicle
If you’ve defaulted on your auto loan, the lender may choose to repossess the car. The process isn’t pleasant, and it can wreck your credit score. If you want to avoid repossession, but you have no other options, you can voluntarily surrender the vehicle to your lender.
A voluntary surrender allows you to return the vehicle to your lender on your terms, and while it can damage your credit, it won’t have as big an impact as a repossession. You’ll also be able to avoid certain repossession-related costs, which lenders may choose to add to what you owe. If you feel as though this is your only option to avoid a repo, contact your lender to set up a time and a place for the vehicle to be turned in.
You May Like: What Credit Score Is Needed For Usaa Auto Loan
Cant You Just Ignore The Bank And Go Rogue
You could just form a gentlemen’s agreement with someone and let them drive the car if theyll agree to regularly pay you and youll continue to make the payments on the vehicle with their money. But what happens if they dont pay up?
In essence, you will be a repo man for your own car, with no force of law to back you up. Depending on your insurance, if the driver is in an accident and they are not listed as one of the authorized drivers on your policy, you could be out for a ton of money if they are in a bad accident. Youll also be responsible for any unpaid parking tickets and tolls that they may rack up in your vehicle.
How Do I Find Someone To Take Over My Car Lease
Another way to transfer your lease is to simply ask a family member or a trusted friend to take over the monthly payments. Make sure auto insurance still covers the vehicle, and have a clear understanding of who will pay for any excess wear and tear at the end of the lease.
Also Check: What Credit Score Is Needed For Usaa Auto Loan
How To Make An Electronic Signature For The Taking Over Car Payments Contract Form On Ios
To sign a take over car loan payments contract template right from your iPhone or iPad, just follow these brief guidelines:
After its signed its up to you on how to export your printable contract for taking over car payments: download it to your mobile device, upload it to the cloud or send it to another party via email. The signNow application is just as effective and powerful as the online app is. Get connected to a strong connection to the internet and start completing documents with a legally-binding eSignature within a couple of minutes.
Buying A New Or Used Car May Be One Of The Biggest Purchases You Make In Your Lifetime With All The Moving Parts That Come With A Car Loan Figuring Out How To Pay For Your Ride Can Send You For A Spin
With the average price of a new car hovering around $35,000, according to a Consumer Financial Protection Bureau blog post published in 2018, chances are youll have to take out a car loan.
But before you pick out your next set of wheels, its a good idea to do a little homework on auto financing first. In this article, well take a closer look at the most common types of car loans, auto loan lenders, important key terms to know and how to prepare to apply.
Don’t Miss: Usaa Car Loan Pre Approval
Avoid Fronting And Fraud
If youre looking to transfer car finance to someone else because you took it out on their behalf as they were financially unable to acquire credit without letting the lender know your intention, you could be accused of fronting and fraud. Its illegal to take out finance for another in this way.
Always be upfront when applying for car finance. There are lenders who specifically arrange credit possibilities for those with limited or poor credit histories. Many will accept parents taking out car finance for their children and will allow them to act as a guarantor. This is possible for those with a history of bad credit applying for credit too. Many lenders will allow them to add someone who will vouch for them financially in order to secure a car finance agreement.
Launch Of Maruti Suzuki Special Edition Dzire Prices Start From Rs556 Lakh
The 2018 Maruti Suzuki Special Edition Dzire has a wide range of additional features, including wheel covers, power windows, and rear parking sensors. The car also has remote central locking facility and a Bluetooth-enabled music system. Other significant features of the vehicle include ABS, brake assist, and dual front airbags.
The car will continue to be made available with the 1.2 litre petrol engine and the 1.3 litre diesel motor. The petrol engine generates 82 bhp of peak power and 113 Nm of maximum torque. The diesel motor will juice out 74 bhp of peak power and 190 Nm of maximum torque. The engines are both coupled to 5-speed manual transmissions.
14 August 2018
Recommended Reading: Does Va Loan Work For Manufactured Homes
Option #: Pay Off The Loan
Easier said than done, right? The average used car loan was $20,554 in 2019, according to a recent Experian study. If you had enough extra cash lying around to pay off the loan, chances are you would have already done it by now.
There is one way to raise enough money to pay off the loan, though: by selling the car. This might be tough if youre attached to the car, but consider the consequences if things go bad. If the other person decides to skip town and stop paying, then you could be on the hook for the payments.
Again, if you have a co-borrower, youll need to get their permission before you sell the car because legally, its their car too.
Compare Auto Refinance Rates
What Are The Components Of A Car Loan
The components of a car loan help you decide whether the loan youre looking at is the right fit for your pockets. Make sure to keep these four key elements in mind to know before committing to any:
Vehicle price This is the final price of the vehicle as listed in your purchase agreement. It may be higher than the sticker price if it includes taxes, fees, extended warranties or other charges from the sale.
Term length The term length is the amount of time it takes to completely repay the car loan with interest. Common term lengths are 3-5 years or .
Interest rate Interest rates represent the amount of interest you pay until the auto loan is paid in full. Interest rates for car loans can vary widely, depending on your credit history and other factors.
Down payment A down payment is the percentage of the vehicle price that is paid to the dealer up front. Down payments can be as low as 0% however, 10% is recommended for a used car and 20% for a new car.2
Read Also: Refinance Usaa Auto Loan
How To Return A Leased Vehicle
If you’ve leased the car, you’re in a somewhat different situation. Obviously, you can’t sell it.You can return the vehicle to the dealer, but if it’s before the lease expires, you’ll likely face some stiff early termination fees. Plus, you will still owe the balance remaining on the lease andâto add insult to injuryâalso lose the upfront money originally paid.
However, drivers who want out of their contract ahead of schedule can take heart: There are a few options that allow you to circumvent the usually harsh termination penalties. One frequently overlooked pathâand often the least expensive choiceâis to transfer the lease to someone else.
It works like this. Suppose you have two years left on a three-year lease. Whoever buys your lease agrees to make the remaining monthly payments. While some finance companies donât allow such transfers, the vast majority do. The trick is finding someone interested in taking the reins from you.
My Car Was Totaled And My Insurance Did Not Cover The Full Loan Amount What Should I Do
You are responsible for making your regular monthly payments until the loan is paid off. If you had Guaranteed Asset Protection insurance on your loan, some or all of the remaining balance may be covered. If there is a remaining balance on the loan after the GAP payout is determined, you are responsible for making regular monthly payments until the loan is paid off. You can also make a lump sum payment, if you prefer.
You May Like: Can You Refinance A Fha Loan
Can Another Person Take Over My Car Lease
Whoever buys your lease agrees to make the remaining monthly payments. While some finance companies wont allow such transfers, the vast majority do. The trick is finding someone whos interested in taking the car and the lease over from you. Fortunately there are websites that can make that relatively easy.
Can Someone Take Over A Mortgage
An assumable mortgage allows a buyer to take over the sellers mortgage. Once the assumption is complete, you take over the payments on a monthly basis, and the person you assume the loan from is released from further liability. If you assume someones mortgage, youre agreeing to take on their debt.
Read Also: Usaa Refinance Auto Loan Calculator
Send A Death Certificate To The Lender
Lenders need to know about the death of the car owner as soon as possible. Sending the death certificate may trigger the lender to send you specific loan paperwork. Each lender handles this differently.
The executor or administrator of the estate should have multiple copies of the death certificate and the certificate can help begin positive communication between the estate and the lender.
Ask For A Voluntary Repossession
If you simply can’t afford your car payments any longer, you could ask the dealer to agree to voluntary repossession. In this scenario, you tell the lender you can no longer make payments ask them to take the car back. You hand over the keys and you may also have to hand over money to make up the value of the loan.
Voluntary repossession allows you to return a car you financed without being subject to the full repossession process. This could spare you some credit score damage, though a voluntary repo could still be reported to the credit bureaus.
Read Also: How Much To Loan Officers Make
Negotiate With Your Lender
Depending on your situation, getting out of your car loan may be overkill. Call and speak with your lender about your situation and see if you can make a deal.
For example, if your financial challenges are temporary, you may be able to negotiate a forbearance, which pauses your payments for a short period. Your lender may also offer to modify your monthly payment amount to make them more affordable until you can get back on your feet financially.
Each lender has its own policies for people experiencing financial hardship, so contact your lender to see which options are available.
Settling The Outstanding Debt
Another option open to car buyers who would like to transfer the agreement to another but cannot do so, is to settle the existing debt and take out a new agreement in the other persons name.
Again, talk to your finance company. Let them know your intentions and ask for the help in facilitating the process. If they are losing your finance payments per month, they may be happy to make finance possible for the person you wish to transfer yours to.
Discuss the situation with the other person if this is possible. Together you may be able to come to an agreement to pay off the existing debt together and then take out a new car finance deal in their name instead.
Don’t Miss: What Credit Score Is Needed For Usaa Auto Loan
Make As Many Payments As Possible
One more choice to escape from the negative equity position is to pay extra money each month toward the loan principal. This allows you to pay off the loan quicker and build equity at a faster rate. Before you do, check whether your loan agreement adds a fee if you pay it off early.
Another tactic would be to use savings money you might have been putting aside for a down payment on a future purchase to pay off your loan. The downside of that idea is that you no longer have money left for a down payment on your next car and not many banks want to make loans to consumers who have no down payment.
Does Transferring A Car Loan Affect Credit Score
Voluntarily surrendering your vehicle will have a substantially negative impact on your credit scores because it means that you did not fulfill the original loan agreement. When you voluntarily surrender your vehicle, the lender will sell the car to recover as much of the money owed as possible.
Also Check: What Credit Score Is Needed For Usaa Auto Loan
Cosigners Are Only Responsible For The Loan
In a cosigner situation, one borrow is the primary borrower. Thats usually the person whos going to use the car, and who has the primary responsibility in paying it off. For example, if a parent cosigns on a loan for their daughters 18th birthday, its the daughter who will drive the car and be primarily responsible for payments.
But if she falters and falls behind, then the parents are on the hook to make the payments. The lender will come after mom and dad for the money, in that case. Even worse, the late payments will be listed on both the daughters and the parents credit report, potentially ruining both of their credit scores.
Thats a scary thing to think about if youre on a cosigned loan, but at least the damage is limited to just your credit history. Thats not necessarily the case if youre a co-borrower, however.
Reasons For Returning A Vehicle
There are a number of reasons why you may need to return a financed vehicle. Returning a car could make sense in any of the following scenarios:
- You can no longer afford the monthly payments and want to avoid repossession.
- You purchase a new or used car only to realize shortly after that it’s a lemon.
- You believe you overpaid for the vehicle and would like to look elsewhere for a car.
- You move to a new city and no longer need the vehicle.
- You simply changed your mind about the purchase.
Trading the vehicle in for a less expensive car is something to consider if you still need a car but can’t afford the one you have. You’d still have a car loan payment. But if the vehicle is less expensive, the new payment may be more affordable for your budget than the previous one.
Also Check: Genisys Credit Union Auto Loan Calculator
I Bought An Aftermarket Product And Can’t Remember What It Covers Where Can I Find This Information
The contract for the aftermarket product will provide the details of the coverage, including items such as the cost, what is covered and excluded, and how long the coverage lasts . If you have questions about the coverage, contact the dealership or the coverage provider their contact information is listed on the contract. To request a copy of the contract, contact the dealership or call us.