Dayna Can’t Afford to Keep Her Car Or Get Rid Of Her Car, Even By Repossession


“Dear Steve,

I have an upside down auto loan that I owe about $27,000 on a Mazda car and my monthly payments are $500 per month for 7 years with about 12.45 percentage interest rate. I am unable to refinance my auto loan because my credit is not that good and I owe too much debt.

I am trying to figure out options on how to lower this car payment or get rid of the car – since I am upside down- selling the car is probably not going to help. If I did not have the car, I think I would have enough money to get myself out of other credit debt I have.

Do you have any suggestions or can you help? I have no savings either and it is getting check to check for myself and my family.

What can I do to either lower my car payment or get rid of it without heavy penalties and repossessions?


Dear Dayna,

Sadly your situation is experienced by thousands and thousands of people each day.

It is a sad and unfortunate situation for which there are only a couple of good solutions. One solution is to do an auto loan refinance. But this depends on credit being available and you having a reasonable credit score and good credit. Doing an auto loan refinance in that situation can lower your car payment by extending your auto loan out for a longer period of time, but then again, your loan is already fairly strung out so it is doubtful if a lender would go further than seven years. At this point it is not going to do any more damage to your credit to see if you qualify for an auto loan refinance so click on the link and see what they’ll offer you.

The other solution is to sell the car and take cash that you have in the bank to pay off the remainder of the loan, after the sales price, to get a clean title to then transfer the car to the buyer. But then again, you don’t have any extra cash and that isn’t really a possibility for you either.

So what are we going to do here?

You probably need the car to get back and forth to work so we’ve got to prioritize your other credit debts. If those debts are credit cards or unsecured loans then the most logical thing to do is to look into a debt management program to see if they can reduce your payments on that credit, or stop paying it altogether.

If you stop paying it and you think your financial situation is going to improve in the next few months, you can then go back and make a plan to repay your debt. If you don’t think you will be able to repay anything then you can consider bankruptcy now or wait until the collection pressure gets to be intolerable and then consider bankruptcy.

I wish i had better news for you but it is a tough situation to be in with few good options.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Steve Rhode
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3 thoughts on “Dayna Can’t Afford to Keep Her Car Or Get Rid Of Her Car, Even By Repossession”

  1. If it where possible loaning companies should transfer loans to the local area of the debtor. A financial holder or a nonprofit agency who will manage the loans will make arrangement to paid back the loan at the amount they can maintain until their job situation or their financial situation has improved. Then the debtor can resume the payments at the loan payment amount. They should be given a time frame to accomplish this task. It would not only help the car dealerships or financial institutions but put money back into the economy. Saved auction cost and loss of loan default.

  2. I would suggest to Dayna that if she can borrow money off of her 401k, then sell the car and borrow enough money to pay off the difference. 401k loans give reasonable interest rates and you pay yourself back. Also, it won’t show up on your credit report. The bad side is that if you lose your job you have a tax problem. That is why she should sell it and just borrow enough to pay off the car loan rather than borrowing the whole 27000.


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