No one accepts a loan on a vehicle with the intention of falling behind on payments. Despite your best efforts, this is exactly what happened to you. You’re now what’s known as “upside down” on your loan. What this means is that you owe more on your vehicle than it’s currently worth. It doesn’t matter if an unscrupulous car salesperson, paying more than the car was worth when you bought it, or missing payments got you to this point, you want to get out of your predicament. So, how do you do that?
Get Gap Insurance
If you don’t already have it, add gap insurance to your auto policy to protect yourself financially if you’re in an accident that totals your car. If you are involved in such an accident and don’t have gap insurance, your insurance provider will only pay you what the car is currently worth, minus your deductible. That means that if you’re upside down, that claim check won’t be enough to take care of the entirety of your loan.
With gap insurance, which adds about $20 to your yearly premium, you’ll be financially covered for the difference in your car’s current value and your remaining loan balance. This is good coverage to have because you’ll have one less thing to worry about if you’re involved in a car accident.
Look Into Selling Some Items
There’s a good chance you’ve got some items around your house that you can sell and put the proceeds toward your car note. Even if you don’t catch up completely, selling items could knock out a sizeable portion of your loan. Depending on where you live, where you work, and your options for public transportation, you may want to look into flat out selling your car. True, you’ll still have some portion of your loan leftover after selling, but a couple thousand dollars is more manageable than several thousands of dollars.
Make the Car Work for You
These days, it’s easier than ever to put your car to work for you and earn an income while doing so. Look into becoming a driver for a ridesharing service. Or, you can deliver either packages or groceries. There are even companies that will pay you to wrap your car in advertising or marketing materials for them.
No matter where you live, chances are good that there’s a side gig you can take up that involves your car. This way, your car is essentially paying for itself from the money you make. One thing to bear in mind here is the fact that all this extra driving around will put extra wear and tear on your car, so be sure you plan for that.
Make Extra Payments When Possible
One good way to chip away at your loan is to make extra payments. The same effort one may use to get a car with bad credit is the same effort you can use to look for ways to tighten your budget so you can make an extra monthly payment on your loan.
How do you do this? Look over your budget and where your money is going. Chances are, there are some non-essentials you can eliminate, such as a daily cup of coffee, streaming services, dining out, or a gym membership you never use. You have to learn to differentiate (and be realistic) about your wants and your needs. Living lean for a while could make it so that you’re no longer upside down on your auto loan.
Rather than focus on the fact you’re upside down on your car loan, concentrate on ways you can catch up. Some short-term sacrifice is sure to result in long-term gain. Be sure to put the above tips to good use.