Although there are legal ways to get out of an automotive sales contract, most still leave you financially responsible for the outstanding loan balance. The best option is to speak with your car financing company and discuss whether they can do anything to help make your payments more affordable.
Selling the Car
You can try to sell the car for an asking price that is the same as the balance on your loan. After the sale, you pay off your car loan and get a new title that no longer lists the finance company as a lien holder. You then will have to sign the car over to the new owner so he can register it. If you cannot sell the car for what you owe on it, you may want to sell it for what you can get and put that money toward your loan. In this case, you will still have to make the remaining payments.
Loan Assumption
One option of getting out of your car loan contract is to have someone assume or take over the loan payments. This usually means that the person assuming you car loan will have to qualify for a loan. Her loan amount will be the remaining balance of your car loan. After she qualifies, the car loan goes into her name and out of your name. At that time, you are no longer legally responsible for the loan. You should check with your financing company to make sure that your car loan is assumable.
Voluntary Repossession
You can turn your car into the car dealership in an act known as voluntary repossession. You should be aware though, that doing so does not absolve you from being financially responsible for the remaining balance on the car. What will happen here is that the dealership will sell the car at auction, apply the proceeds minus any fees to your outstanding loan balance. Voluntary repossession should be a last resort as it will negatively affect your credit score and you will still have to pay the difference between the balance of your loan and the auction sale price of the car.
Considerations
As soon as you realize you can no longer afford your car payments, you should contact the loan company. They may have options for you such as a deferment of payments or a temporary forbearance of payments. These options allow you to time to right your financial situation. If the only option you have left is to give the car up, remember that there is little difference between a voluntary and involuntary repossession. You should consider your options very carefully before going either route.
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