By Eve Chen () - June 25, 2019
If your car loan payments have become too difficult for you—perhaps because of a change in your income, marital status or housing situation—maybe it’s time to make some decisions. No one wants to live under constant financial strain, nor should they have to. Many choices in life are nearly impossible to undo—but not this one. So let’s take a look at your options.
First, do some digging to help define the problem by asking yourself some simple questions. Based on these answers, you can decide whether to cut bait and make a complete change or stick with your car and refinance.
Say you are a full-time employee who has decided to quit working and pursue a graduate degree. If your car is practical, gets good gas mileage and requires few repairs, and you will need a car for school, it may be a good idea to keep the car and seek refinancing to make it more affordable. A decision to refinance can often work to your advantage, especially if you have made improvements to your credit. Even if your credit is about the same, you can still benefit by stretching out your payment schedule to make your payments more affordable.
On the other hand, if your car is pricey and loaded with extras—clearly more than you need as a student with no income—it’s probably a great time to consider a trade-in. Through a trade-in, you can choose a more economical car with lower payments, and also transfer the equity you have built in your pricey car toward your new car. Both of these steps will help reduce your payments to a more affordable level.
Do Your Research
Regardless of which path you choose, you will need to do your research. If you decide to trade in your car for a lower-priced car, you’ll want to make sure that you are getting a fair deal for your trade-in. It’s a well-known fact that if you trade in your car to a dealer, you will get a lower price than if you sell it yourself to a private party. After all, the dealer is taking your trade-in with two goals in mind: to sell you a new car and sell your old trade-in, both at a profit. At the very least, you owe it to yourself to get onto a site like Kelley Blue Book (kbb.com) to learn what your trade-in is really worth, considering its age and condition, and compare it to the dealer’s offer.
If you think your current car is right for your situation moving forward, you can contact a company like RefiJet, which helps customers get a refinancing deal that is more advantageous. Since we work with so many different lenders, we can often find better loans for people who qualify. The important thing is to realize you have options—there is always another car or financing deal that better fits your circumstances.