Three years ago, when I was 18, I went to a dealership to buy my first car. I ended up walking out with a deal I didn’t fully understand at the time—a $21k loan at 25% APR with a $550 monthly payment. I only put down $1,200, and the car was worth about $10k back then.
Fast forward to now, the car is only worth $3k, but I still owe $18k because of the high interest. I’ve tried refinancing, but the offers aren’t much better, and I’ve been denied for personal loans or debt consolidation. I’m barely keeping up with payments and won’t be able to afford it much longer. I don’t want to do a voluntary repossession because I know it will hurt my credit.
Is there any other way out of this? Am I stuck paying this off no matter what? Any advice would be really helpful.
You’re in a tough spot. If you default, the car will be repossessed and auctioned, but they’ll still come after you for the remaining balance. If your financial situation is really bad, Chapter 7 bankruptcy could be an option. It wipes out unsecured debt, and depending on your situation, it could be better than a repossession hitting your credit.
If you can refinance to a lower interest rate, that would help, but most lenders won’t refinance a loan this far upside down. Other than that, your only real option is paying it down aggressively.
You’re in a rough spot, but unfortunately, you signed the loan agreement. At this point, the only real move is to keep making payments and try to pay it off as quickly as you can.