How do I get out of a car loan I can't afford? (2023)

Can I give my car back on finance if I can't afford it?

Usually the finance is provided by a company which is separate to the garage or dealership. If you can't keep up with payments you can hand the car back. You won't get any of the payments you've made back, but if you've paid more than half of the agreement you'll usually have nothing else to pay.

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How can I get out of a car finance deal?

  1. Speak to the finance company.
  2. Pay the settlement figure and sell the car.
  3. Part-exchange the car for a cheaper new one.
  4. Use Voluntary Termination (VT) to end the agreement.
  5. Use Voluntary Surrender to return the car.
  6. Speak to the finance company.
  7. Pay the settlement figure and sell the car.

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Does giving back a financed car hurt your credit?

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.

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What happens if I can't afford my car?

If you can't resume payments and get caught up, your car can be repossessed. Worse, you could still owe money on your former car after you no longer have it. The repercussions can stick with your credit rating for years, making it hard to borrow money again, and increasing the interest on any loan you do get.

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Can you walk away from a car loan?

It is never too late to walk away from a loan or auto lease if you can no longer afford it. Take the time to understand all of your options and choose what is best for you based on your financial situation.

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Does surrendering a car mess up your credit?

A voluntary surrender is turning your vehicle over to the lender because you're unable to make your auto loan payments—and it will hurt your credit. However, voluntary surrenders may not look as bad on a credit report as a repossession, so they may be a better option if offered.

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Is a voluntary surrender better than a repo?

Because a voluntary surrender means you worked with the lender to resolve the debt, future lenders may view it a little more favorably than a repossession when they review your credit history. However, the difference will likely be minimal in terms of your credit scores.

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Can I sell my car with a loan on it?

Yes, you can sell a financed car, but if you plan to sell privately, you need to figure out how to pay off the remaining loan balance before transferring ownership. Or, you can work with a company that will take care of it for you.

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How many car payments can you miss?

Two or three consecutive missed payments can lead to repossession, which damages your credit score. And some lenders have adopted technology to remotely disable cars after even one missed payment. You have options to handle a missed payment, and your lender will likely work with you to find a solution.

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Can you back out of a finance deal?

Though some types of financing agreements may allow for a cooling-off period where you can cancel the agreement, this is not a right and there is no cooling-off period required by law.

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Can you change your mind after financing a car?

'I have buyer's remorse'

The vast majority of car dealers have no written policies that allow you to rescind the purchase agreement you've signed. This means your only recourse is to plead your case.

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What should you not say to a car dealer?

5 Things Not to Say When You're Buying a Car
  • 'I love this car! '
  • 'I've got to have a monthly payment of $350. '
  • 'My lease is up next week. '
  • 'I want $10,000 for my trade-in, and I won't take a penny less. '
  • 'I've been looking all over for this color. '
  • Information is power.
14 Feb 2021

How do I get out of a car loan I can't afford? (2023)
What happens if you return a financed car?

If you return the car to the lender, the lender will likely sell it. It will apply the proceeds of the sale to your car loan balance, after reimbursing itself for the costs of sale and certain fees.

Can you opt out of a car loan?

Absolutely. If you've gone through the necessary steps to apply for an auto loan and been approved, you're not obligated to accept the offer. Auto experts advise borrowers to seek preapproval with multiple lenders to find the best offer, then use that as a backup at the dealership.

How long do you have to cancel a car loan?

While many people cite the Federal Trade Commission's cooling-off period, which allows you to return a purchased good after three days, it doesn't apply to cars. However, here are a few situations where you may be able to return the car and cancel the loan: If the dealer misled you into buying a car.

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