6

How would I do that? Wouldn't know where to start. My financing is with a major bank and I think my rate is pretty low. Are there likely penalties?

9

You say "it's expensive". I'm going to interpret this as "the monthly payments are too high".

Basically, you need to get your old loan paid off, presumably by selling the car you have now. This is the tough part. If you sold the car now, how much would you get for it? You can use Kelley Blue Book to figure out what the car is roughly worth. That's not a guarantee that it will actually sell for that much. Look in your local classifieds to see what similar cars are selling for. (Keep in mind that you will usually get less for your old car if you trade it in versus sell it yourself.)

Now, if you owe more than your car is worth, you're in a really tight spot. If you don't get enough money when you sell it, you are still stuck with the remainder of the loan. In that case, it is usually best to just stick with the car you have, and be more cautious about payments and loan length the next time you finance a car.

Penalties: Most car loans don't have any kind of early repayment penalty. However, you should check your loan paperwork just to make sure.

3
  • @msemac: pretty much what I was going to say.
    – sdg
    Apr 22 '10 at 13:09
  • Thanks so much for this - I will check the value and review my loan paperwork. Yes, by "expensive" I mean the monthly payments are too high for me ($690!)
    – Nat_Rea
    Apr 22 '10 at 15:32
  • 1
    Figure out what you can sell the car for. Then see about getting a loan to cover the difference from a local credit union. Or save cash for the difference.
    – Mike
    Apr 23 '10 at 2:02

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