5. Downgrade to a Less Expensive Vehicle
Considering all the factors, if your car’s value is less than your loan amount, it’s not ideal to go with this option. You should seek the help of a professional appraiser before you put your car on sale.
When you can’t refinance your car, trading it in for a less expensive one can work for you. Bring your car to your dealer and ask for a downgrade to a less expensive and used car. Doing so will reduce your loan balance. If you have excess equity in your car, you can use the money to pay your loan.
6. Transfer the Excess Balance to Your Credit Card
If paying the monthly car repayment amount is your problem, moving the excess balance to your credit card can make the payments more manageable. This works if you have a huge credit line and you can take advantage of a 0% introductory annual percentage rate (APR).
However, you need to be disciplined about paying your credit card so that you will not create more financial trouble for yourself. Getting into credit card debts will hurt your credit standing. So, make sure you can commit to paying regularly and timely to avoid incurring additional interests and penalties.
How to Avoid Bad Car Loans?
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To avoid a terrible experience of getting into bad car loans, you need to make sure you’re taking the right steps from the outset. You need to do your research and deal-making well. Here’s your checklist for car loans:
Shop around and compare offers. Don’t stick to the first lender and dealership you found online or in your area. Make sure that you check different offers and compare their rates so that you’ll end up with the best deal for you. Check online reviews from previous customers to gauge the quality of their services and find the best car loan.
Secure a pre-approved car loan. Before you go to a car dealer, it’s best to get a preapproved loan. It will allow you to know your interest rate and streamline your options for car models.
Check the car’s real market value. A dealer may oversell a car, so it pays to be knowledgeable about the true pricing of the car you want. You can check car websites, like Edmunds or TrueCar, for the car’s current pricing.
Estimate the car payment. With the help of an auto loan calculator, you can have an idea of how much you’ll have to pay for the car every month. Make sure that it fits your budget.
Test drive the car. Visit the dealer and test drive the car that you want. It will help you get the feel of owning it and if it fits your needs. Inspect the vehicle carefully before you sign any deal.
Negotiate with the dealer. Let the sales manager know that you’ve been shopping around and comparing prices for the car model that you want. Then, ask for the dealer’s best offer. Because you know the true market value, you’ll know if you’re getting a better deal or not. Try to negotiate an offer lower than the market value.
Say no to add-ons. Expect the sales manager to pull an upsell strategy once you’ve agreed on an offer. You will likely receive an offer to purchase extended warranties or install car technology and accessories. Prepare yourself to say no to such offers.
Study the loan terms carefully. Before you sign anything, make sure that you read the contract carefully and study the loan terms. Check the numbers to ensure that they are correct and reflect on what you’ve agreed on.
