Canceling a car loan contract can lower your credit rating and make it difficult for you to qualify for a future loan. However, unexpected situations do occur, in which you may be unable to afford your car payment. Rather than stop making payments and have the finance company repossess the automobile, consider various ways to get out of a car loan contract and possibly save your credit rating.
Read your auto loan contract. Some auto loan contracts include a clause that allows new buyers to return a vehicle within three days of a purchase. If you change your mind and you want to return the car, carefully read your loan agreement and see whether you're able to cancel the contract.
Return the car, and pay the interest. If the finance company and dealership agree to take back the car, return the vehicle to the dealership immediately. Because interest begins to accrue once you sign the auto loan, the dealership will request an interest payment before taking back the car.
Sell the automobile. If unable to return the vehicle, contact your finance company and ask for your payoff balance. Place classified ads in the newspaper or position a "for sale" sign in the vehicle's window. Sell the automobile, and use the proceeds to pay off the auto loan.
Refinance the vehicle loan. If you don't like the terms of your existing car loan, find a new lender and refinance the loan. A refinance can reduce your interest rate and monthly payment, or extend your loan term.
Consider a voluntary repossession. As a last resort, consider a voluntary repossession and return the car to the dealership. The dealership will auction off the vehicle to pay off the loan balance. If the car sells for less than the balance owed, you're responsible for the remaining balance.
