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When your car is under water

Putting a big down payment on a new vehicle is not an option for many people in Florida, but reliable transportation is essential for most. Car dealerships are often willing to “help” by stretching the loan over a longer period at a high interest rate. Vehicles rarely increase in value, though, and under those conditions, it is likely that the payments will not keep pace with the depreciation. According to U.S. News, car owners may have options when they find themselves with an under water vehicle loan.

Simply continuing to drive the vehicle until it is paid off may be one of the best choices for those who can. However, getting out from under the high payment can be a necessity in many circumstances. In some cases, it may be possible to refinance. Or, if the difference between the debt and the value of the car is low, a person may be able to sell the vehicle and pay that balance, then start fresh. A car owner may be able to get that balance financed by a credit union or bank, and pay off the rest of the loan after the sale.

MoneyCrashers.com suggests that, if coming up with the money to sell the vehicle and pay the difference is not possible, paying off the original car loan with a credit card may be a solution. However, a person who is struggling financially may not benefit from this situation unless the interest rate and/or the monthly payments are much lower than the original loan. 

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