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How do I get out of a bad car loan?
I have a terrible 19% interest rate on my car loan. I feel stuck. Is there any way to get out of a bad car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Unfortunately, it’s fairly common for drivers to find themselves in bad car loans that charge high interest rates. Many people even stay upside down in their loans for a long time, meaning they still owe much more than their car is worth.
While you can’t just decide to back out of a loan, you can pay it off more quickly to avoid paying massive amounts of interest over time.
The key is to start paying down the principal. You can do this in several ways:
- Pay a principal-only payment one or more times per month
- Make a lump-sum payment toward the principal once a year
- Double or triple up on payments each month
- Round up payments to the next $50 or $100
Since your interest rate is so high, it’s likely that a lender won’t refinance you, but it doesn’t hurt to try for an
auto refinance
. Shop around for refinancing rates to see if any might work for you.In the meantime, find ways to cut costs in your everyday living. Skip the Starbucks, eat in more often, and take a look at your
car insurance
policy.If your car insurance rates are a bit too high, try comparing rates with
Jerry
. In just minutes, you can find rates from over 50 insurers to get the best rate for your coverage level.View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
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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