Nothing is worse than finding out the hard way that you made an unfavorable financial decision that will affect you long term. A bad car lease fits in this category. If you felt backed into a hasty decision regarding your lease terms because of the circumstances surrounding your new car acquisition or you simply were less educated when you signed than you are now, don’t consider it a wash and stick it out. Exercise some of your options to refinance your auto loan and put yourself back in control of your monthly payments.
Where to Start
Before you call your lender demanding changes, do some research and check out available options. An easy place to start is online using an auto loan refinance calculator. This tool allows you to enter your credit score and loan balance into the auto refi calculator and it will estimate your new payments for a 60- or 72-month lease. Once you have a general idea of what you qualify for as far as negotiated terms, then it is time to bring that information to your lender and learn about current interest rates. All these small pieces work in harmony together to create the terms of a refinanced car loan, so it’s important to shop around, ask questions, and be knowledgeable so that you don’t find yourself making the same mistakes you made initially.
If your credit score has not improved, or you are near the end of your lease term, refinancing may not be applicable, or helpful, so what else can you do? You can try and sell your car to a private party to get out of the lease. You will have to tell prospective buyers that the car still has a loan on it, and once you find one communicate with your specific lender on how to arrange the transfer. During this process, the new buyer pays off the loan, and if there is any extra money afterward that is cash in your pocket. Not all lenders offer payment forgiveness, but it never hurts to ask. Talk to the customer service department associated with your loan and let them know that you are having a hard time making payments but do not want to default on your loan. Being proactive might award you the opportunity to skip a payment or two and save that money for future payments.
Avoiding Future Mistakes
Be assertive with your quest for knowledge and do not be afraid to ask for more in-depth explanations of things you do not fully understand. At the end of the day, this is your money, and your financial reputation and banks and car dealerships are not looking out for your best interests, you need to do that for yourself. Pay attention to loan terms and interest rates. Digest what the loan means for you on a monthly level as well as throughout the duration of its lifespan, and be realistic about what you can handle month to month, overextending yourself from the start is a slippery slope. Shop your car loan around, do not assume that the offer from the seller or dealer is the only choice you have. Compare offers to make sure that you are getting the best deal. It is possible to recover from a bad car loan and learn more about the basics during the process so that you do not find yourself in this position with future loans.