How To Get Out Of A Car Loan

  • June 25, 2024
  • 6 min read

So what if you have a vehicle that you’re having trouble keeping up with the payments on? Maybe you owe more than it’s worth. A few years ago, it would have been easy to get out of that vehicle because you could sell it for more than your loan and just be done with it. But now that the used car market is changing, you may find that your loan exceeds the amount that the vehicle is worth, which means you can’t get out from underneath it.

Loan Payment Relief Options
There may be ways around this. Every bank has different programs and policies for loan payment easing. You see on the screen here we have a document from a credit union that has a loan forbearance program and payment deferral program, and many banks have this. Some banks also have very specific programs for vehicles where you can do what’s called a short sale on a vehicle.

Short Sales Explained
Short sales were very popular in the 2000s for real estate. If you had a house that had a mortgage on it and the house was worth less than your mortgage, you could arrange and negotiate with the bank to sell it for what the market value was, and then the bank would waive the difference. So, if you owed $300,000 on a house and it was only worth $250,000, they would let you sell it for $250,000, clear off the mortgage, and that way you could get out from under the house. You could do the same thing with vehicles. Many banks have a very specific formal program for it. Even the ones that don’t, you can present to them a package of information and ask them to do a loan forbearance or loan payment deferral.

Presenting Your Case to the Bank
So, let’s say, for example, you have a vehicle you owe $18,000 on, and it’s only worth $12,000, and you can’t afford the payments or don’t want to afford the payments. Obviously, if you can’t afford the payments, you also can’t afford to come up with the $6,000 difference to cover the loan amount if you sold it. But what you could do is if you went to that bank with a certified appraisal or valuation for the vehicle and a description of the vehicle condition, mileage, a breakdown of your income, and tell the bank, “Look, the vehicle is worth $12,000. I owe $18,000. I would like to sell it for $12,000 and have the $6,000 waived.” If you are current on your payments, they may look at it one way. If you’re late on your payments already, they may look at it another way.

Avoiding Voluntary Repossession
Now, what you don’t want to do necessarily is a voluntary repossession because if they repossess the vehicle, they will sell it for $12,000, and they’ll bill you for the $6,000 and put it on your credit. What you want to do is negotiate in advance that you are going to sell it for $12,000. You will handle that, and you want them to waive the $6,000. Now, sometimes they might not waive the whole amount. They might waive part of it and allow you to make payments on the difference. For example, if you sell it for $12,000 and owed $18,000, they’ll clear the title so you can sell it and give a title to the next buyer, and they might say you need to pay $2,000 of the $6,000. We’ll eat $4,000. You have to pay $2,000. Give us $100 a month for a year and a half. That’s better than paying $700 a month for your car payment or $600 a month, and it goes away.

Negotiation Tips
You want to negotiate those terms in advance. You will have the best chance of negotiating those terms if you have a very good vehicle valuation, a very good description of the vehicle condition, a description of your income, and also a very well-worded reason behind it. You’re not just trying to get them to eat money because that’s real money for them. If they lose that $6,000, it’s like literally them writing a check for $6,000. They’re losing it. You might say, “Well, they can write it off.” Write it off just means they can deduct it from their taxes, but they have to lose it first before they deduct it from their taxes. So make sure you have a very well-put-together package for this. You can get more information from our website below. We even have consulting available to guide you through this process if you would like to make an attempt at it.

Attempting a Lien Release
One other note before you do this attempt, just to get a lien release from that bank. A lien release with no consequence. There’s a package you can send to the bank asking just for a flat-out lien release. If you do it the right way, 30-40% of the time, you may just get a lien release, and you can sell the car. Now, the amount that you owed on your loan still might be collectible under your credit, but you could sell the vehicle and have the cash to maybe pay off some of the loan or pay the payments for a while. Remember, we’re not attorneys. We’re not giving you legal advice, so take it for what it’s worth. But use some of these techniques to help you maybe ease your financial burden from a car loan.

Conclusion and Additional Resources
In the last three or four years, many people got in deep on car loans. We’ve seen car loans with payments of over $1,000. That’s a pretty heavy-duty monthly budget to have. That’s what rent cost 10 years ago for a house. So if you have a vehicle or more than one vehicle that maybe you’d like to get out from underneath or maybe get something newer, get something different, look at this car short sale as a way to try to ease the burden of car loan payments to see if that’ll help you out from a non-optimal, non-ideal vehicle ownership situation.

Invitation for Consultation
Thank you another episode of Actual Human Advisory on Describe TV. Remember, we have live one-on-one consultation appointments available at, where you can book a one-on-one, undivided attention live call with a licensed investigator, a licensed insurance broker, a licensed mortgage broker, real estate broker. I’m also a certified real estate title examiner, a certified civil court mediator, along with having developed and started over 15 businesses, several of which were sold for millions of dollars. So if you do have questions in any of those categories, you can arrange a one-on-one live video consultation using the link below.

Leave a Reply

Your email address will not be published. Required fields are marked *