I spent much of my 20's making very poor financial decisions. I never drove a decent car and constantly found myself on the side of the road or without a vehicle.
At 29 I made a change in my life which resulted in a degree and a better job that more than doubled my income. Of course the tendency for bad decisions was still there and I decided to get newer vehicle that was marked up 10% above bluebook with a 22% interest rate.
I made $500 / month payments for an entire year and after 12 or 13 payments I paid the vehicle from $18,000 to $17,100. After a year I was fortunate enough to refinance my loan to 5.9% through my bank and I'm still paying $500 / month without a problem financially.
Due to having a ridiculously high interest rate early on, I am in a situation where I owe over $15,000 for a car that bluebooks for under $10,000. The vehicle exhibits signs of transmission issues that I fear will be very costly to fix. While I am able to pay the $500/mo for the vehicle, I know for certain I'm engaged in a really bad deal financially.
I'm prepared to take a hit to my credit and even ride a bike to work for the next few months while I save money for a more practical vehicle. I've been thinking of ways to get out of this loan for about a year and, after experiencing some odd behavior from my car this week, am ready to make a move. However, I don't know the best path to take.
How do I exit / terminate a toxic auto-loan with the least personal damage?