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Do any companies refinance upside down car loans?
I have a massively upside down car loan with a high interest rate. Is there a company that will refinance my car at a more favorable rate?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
When your loan is “upside down,” or costs more than the vehicle is worth, lenders consider it a high risk to take you on. If you default on your payment, the lender is left holding the bag on the car—which will result in a big financial loss for them.
Unless you have great credit and a high income, you likely won’t find a taker for a car loan refinance. To become eligible for a refinance, you should pay down the principal on your car until your remaining loan balance equals the value of the car (this is “breaking even”). To do this, try:
- Doubling up on payments each month
- Making a lump-sum payment every so often
- Making principal-only payments
- Rounding your car payment up to the nearest $100
By decreasing how much money you owe, you will increase your equity. Provided that you have good income and credit scores, you should find that a lender is willing to take you on once you’ve broken even.
Jerry
offers an auto refi program for drivers facing a variety of financial situations. Your savings are our top priority—so while you’re at it, check out Jerry’s insurance comparison shopping tool to potentially save hundreds on your monthly premiums!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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