How to Get Out of a Car Loan
To get out of a car loan, you have a few options, including selling your car and using the money you get to pay off the loan, refinancing your car loan so you have a lower monthly payment and better interest rate, and paying off the loan with your savings and keeping your car. If you decide to sell your car to pay off the loan, look up its fair market value first to make sure it's worth more than you owe. To refinance your loan, you'll most likely need a credit score that's above 640.
Determine the fair market value of your car. Use an online service such as Kelley Blue Book to find out what cars like yours are worth in your area. You can get a general idea by simply entering the year, make, model, and mileage for your car. Generally, higher mileage corresponds to lower value. Enter your zip code and add any optional features your car may have (such as power windows or moon roof) to get a more precise valuation. Optional features may boost your car's value. Get a payoff quote on your loan. Contact your lender to find out how much you would need to pay if you wanted to payoff your loan early. If you sell your car , you ideally want to pay off your loan at the same time. If you owe more than the market value of your car, this may not be possible. Let your lender know that you're planning on selling your car. They may have specific procedures for you to follow to close out your loan. If you sell your car for less than the amount you owe, you will still be responsible for the remainder of the money you owe. Some lenders may demand payment in full immediately, while others will allow you to continue to make payment. However, the terms may change since the loan will no longer be secured with your car. Clean up your car and make any repairs. If you decide to sell your car yourself, it should be in the best possible condition. Take it for a professional cleaning and detailing, and complete any necessary maintenance. If you haven't taken your car to a mechanic in awhile, get it inspected and make any repairs the mechanic recommends. It's also a good idea to tell them you're planning on selling the car. They may have additional ideas or recommendations. Any repairs that the mechanic recommends that you decline should be included in your private listing. Letting potential buyers know up front what work the car needs will enhance their trust in you. Use online resources to sell your car privately. In most cases, you'll get more money from your car if you sell it yourself rather than trading it into a dealership. Take quality pictures of the interior and exterior of the car, and write a detailed description. Lean on family and friends to share your listing and increase your exposure. Place posts on free classified listing sites, such as Craig's List. Promote your listing using your own social media accounts. With a private sale , you may be able to simply transfer your car loan. However, this is subject to the terms of your car loan. Talk to your bank before you go this route. Also keep in mind that the person who buys your car will need to meet your lender's credit requirements to assume the loan. Trade for a less-expensive car if you can't make a private sale. If you go to a dealership, they'll typically work the balance of your loan into your new finance agreement. If you choose a car with a lower monthly payment, this might work for you. Check your credit score. You may be able to refinance a bad car loan and get a lower monthly payment and better interest rate if your credit score has improved since you initially financed your car. Generally, you need a credit score above 640 to qualify for refinancing. If you notice any errors on your credit report, contact the credit bureaus to get them corrected before you apply to refinance your car loan.You want the highest and most accurate score you can possibly have. Apply with lenders to refinance your loan. Set aside time to complete applications with several lenders to refinance your car. You'll need to provide basic personal information to establish your identity and income, as well as information about your car and your current loan. Use free online services, such as Credit Karma or Nerd Wallet, to find lenders more likely to approve your application based on your credit history. Apply to at least 2 or 3 lenders so you can compare rates. Each application you submit will result in a hard inquiry on your credit report. However, multiple inquiries for the same purpose typically won't impact your score significantly. Compare offers from different lenders. Provided you meet the minimum requirements, you'll likely have 2 or 3 offers to refinance your car. Rather than immediately going with the first offer, take the time to compare so you can find the best offer for you. If you're interested in saving money overall, you generally want to go with the lowest interest rate – even if the monthly payments are higher than what you're paying now. However, make sure the additional amount will fit into your budget. If your current monthly payment is too much of a strain on your budget, look for a loan that has the lowest monthly payment. This may entail extending the term of your loan relative to the original, or paying a slightly higher interest rate. Sign the contract for your new loan. Once you've chosen the offer you want, the new lender will have paperwork for you to sign so the new loan will go into effect. The lender will connect with your original lender to pay off your original loan. You may need to contact your original lender to let them know in advance that you are refinancing your loan with a different lender. Find out from the refinancing lender what you'll need to do before you sign the paperwork. Get a copy of the signed loan agreement for your records. Keep it with your sales contract and other car documents so you can easily access it when necessary. Check your loan agreement for early payoff terms. Your loan agreement specifies whether any penalty is assessed for paying off your loan early. In some cases, you may be required to pay the full amount of the principal and interest – even if you close out the loan before the end of its term. Check the agreement for an item titled "early payoff" or something similar. Read that item carefully. If you don't understand it, contact your lender for an explanation. Your most recent loan statement may include a balance owed on your loan. However, this amount may differ significantly from the amount of money you would need to payoff the loan in full before the end of the loan's term. Contact your lender for a payoff quote. Depending on how interest is calculated and any penalties assessed, the amount required to payoff your loan may be different from the balance reported on your most recent statement. Lenders will provide payoff quotes, which are only good for a limited period, usually between 30 and 90 days. Assess your savings and budget. If you want to keep your car but need to pay off your car loan, you'll need to find the money to pay the amount your lender quoted for payoff. You don't want paying off the loan to put you in a worse situation financially, especially if you're already struggling to make your monthly payments. If you won't save any money in interest by paying your loan off early, you'll generally be better off if you figure out how to make the payments for the duration of the loan. If it doesn't make sense for you to pay off your loan all at once, talk to your lender about options to make additional payments to pay down your principal. For example, you could make a full payment the first week of each month, and then make a half payment the third week of each month that went entirely towards principal. Pay your lender the payoff amount. If you decide to pay off your loan early, use the payoff quote to determine how much you need to pay. Stay in communication with your lender, and make sure they know that you are paying off your loan in full. Don't rely on a payoff quote more than 30 days old. To protect yourself, it's best to call and get a new quote when you're ready to pay – even if fewer than 30 days have passed since you got the last quote. Even if you normally make your car payments online, it's a good idea to make this final payment using a cashier's check or money order so you have a paper trail. Include a statement such as "payment in full" on the memo line. Keep a copy for your records. Follow up with your lender to close the account. Your lender likely has a specific process for closing out a loan. Once the loan is closed, the lender is no longer a lien holder on your car's title. A new title will be issued and sent to you. Check your credit report approximately 30 days from the date of your payment and make sure the loan is reflected on your credit report as closed. 
Determine the fair market value of your car. Get a payoff quote on your loan. Clean up your car and make any repairs. Use online resources to sell your car privately. Trade for a less-expensive car if you can't make a private sale. Check your credit score. Apply with lenders to refinance your loan. Compare offers from different lenders. Sign the contract for your new loan. Check your loan agreement for early payoff terms. Contact your lender for a payoff quote. Assess your savings and budget. Pay your lender the payoff amount. Follow up with your lender to close the account. 