If you are finding things tight, and are now looking at that car as an anchor rather than the fun purchase it was last year, you may be finding the payments hard to swallow.
There are ways to get rid of car payments, but before you get excited, you will be getting creative with these payments, not walking away. That should be your absolute last resort, as they will haunt you for the remaining balance, and your credit will now be in the toilet.
So, if you have been wondering just how to get rid of car payments, then try these options.
Line of Credit
If you own a house, and there is any room in the equity, you can get a line of credit on your house that you can then use to get rid of car payments. Yes, you will now have the line of credit, but if it is secured with your house, the interest rate will be much lower, and the monthly payment will be lower. This may help you through a tough spell.
If the problem with your payment is that you are trying to pay too many bills side by side, then this is a good option if you can do it. You can get rid of car payments and possibly credit card balances if there is enough room.
Low Interest Credit Cards
Take a good look at your credit cards. Do you have low interest cards that allow you to transfer bills to them? Many credit card companies are scrambling for your business, and would love to get rid of car payments for you by transferring the balance of the payments to the credit card giving you a paid off car.
Just remember you now have a credit card to pay, but if the interest rates are lower, then this just might give you the breathing room you need. Just make sure to make this card a priority for paying off.
If on the other hand the credit card only has a limited time on the low interest rate, this may be too risky to transfer a balance to, since you would have to pay it off fairly quickly before the high rate kicks in
Get Rid Of Car Payment Size.
If the size of the payment is the problem right now, then talk to the lender about possibly extending the loan by another year. You won't get rid of car payments but you will lower the monthly bill.
If the need is to lower the monthly payment, then this may be a good way to go, rather than defaulting on the loan. The lender may help you with this, as long as you don't go past a year extra.
Sell the Car
This will get rid of car payments if the selling price covers the loan. Try advertising in local buy trade and sell papers and let everyone know you are interested in selling.
Another twist to this idea, is that a new buyer may not have the cash to buy the car outright, especially if it is a newer model, but could afford the payments. You would then just take him or her and introduce them to your lender and let them work it out. You get rid of car payments and they get a car, and the lender has a new customer.
This has become very popular. Actually my son had to move to England for a job for a year, and didn't want to be paying for a car he was not using. He advertised it, and offered a deal if someone were to take over the payments. He received a lot of answers to an add like this.
The new buyer didn't even have to come up with a down payment. My son was just happy to get rid of car payments, so he could move.
Get Rid Of Car Lease Payments
If the payments are lease payments, you can try outfits like lease busters. This works well if it is a car that many people want. Otherwise you can advertise to get someone to take over the lease. Sometimes you can sweeten a deal like that with a cash incentive. This may sound odd, but if you can get someone to take over your lease, buy handing them a few hundred dollars, then you get rid of car payments and the stresses that came with it.
It all depends on your reason to get rid of car payments. Whether it is a financial decision due to job loss or lowered pay or lowered hours, sometimes those payments can feel like an anchor after paying for gas, insurance and repairs.
If you still need the car, but just want to get rid of car payments, then try one of the creative ways with lines of credit or low interest credit cards.
If you don't need the car anymore and you have to get rid of car payments on it, then advertise it yourself in the paper and forgo any cash payouts as long as they take over the loan. You may lose out if the car is worth more than the remaining payments, but if those payments are going to drown you then it is worth it.
Cars are expensive to have and to run, but depending on where you live, you may need one. So, rather than walking away from it, get creative, and get rid of car payments and really take a good look at your finances. Can you afford a car right now? Maybe consider using transit and renting a car for anything out of town. You can use their insurance. Many friends of mine that live in the city do this all the time now and have never felt better! They just got sick of the cost of car ownership.
So, really sit down and look at your finances, list everything you pay out. Can you bundle up some other bills? Such as internet, cable and cell phones? You can save a lot if you use the same company. Cut back on takeouts. Take your lunch to work. Try other cost saving ideas, and if these still are not enough cutbacks then get rid of car payments by getting creative or selling it. You need to stay afloat!