How to Cancel a Car Loan

Getting a car loan in Miami is relatively easy thanks to North Miami Mitsubishi. We work with many lenders and we’re willing to work with you even if you have a less-than-stellar credit score. However, changing circumstances may later cause you to consider canceling your loan. Getting rid of an auto loan is often a complicated task, but it isn’t impossible. Check out our helpful guide to learn how to terminate your car loan and what the effects of car loan termination are. To discuss your questions and personalized history with car loans, please get in touch with our staff. We’ve helped thousands of drivers find answers to their car loan questions and find a car they love.

CAN YOU CANCEL AN AUTO LOAN?

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An auto loan is a legally binding agreement in which your vehicle serves as the collateral. This means you’re essentially breaking a contract if you decide to terminate your car loan. However, you may be able to get out of your loan in a lawful manner under certain circumstances. Financing a car at a dealership vs a bank loan may give you more leeway and a window of time where you can return your vehicle and exit a loan.

Usually, you only have three days to return the car and may have to pay a penalty for returning your vehicle after that window. You can find out if this is an option for you by contacting our finance team and discussing your situation and vehicle.

HOW CAN YOU TERMINATE YOUR CAR LOAN?

At other dealerships, you typically won’t have a three-day window to return a vehicle you just purchased and a payment plan you agreed to. However if you need to get out of a car loan, here are other actions you can take to get out of your auto loan before the end of the term, including:

TAKING ADVANTAGE OF A RETURN POLICY

As said before, some auto dealerships have a return policy that allows you to return the vehicle you bought within a certain time frame, which can range from five to 30 days. This is the most reliable way to return a car with a loan on it. The process is quite easy, but the vehicle has to be in the same condition as it was when you drove it off the dealership lot. Otherwise, you may face a penalty if the vehicle is damaged or if you return past the window.

SELLING OR REFINANCING YOUR CAR

Selling your car is the simplest way to terminate your auto loan. If you aren’t happy with the car you just bought, you can just sell it or trade it in at a used car dealership and use the proceeds to pay off your loan. This is a good option only if your vehicle can fetch enough money to cover the balance of your car loan. If you sell your car at a price below your loan balance, you’ll still have to pay the remaining amount. If you want to get rid of your car loan because you don’t like its terms and conditions, refinancing may be a better solution. Refinancing your existing loan can result in a more favorable interest rate, lower monthly payment, or longer loan term.

SURRENDERING YOUR VEHICLE VOLUNTARILY

Voluntary repossession is often the last resort for someone who can no longer fulfill the financial obligations that come with their auto loan. It means voluntarily surrendering your car to your lender. In turn, the lender will sell the vehicle at an auction to pay off your loan balance. If the vehicle sells for less than the amount you still owe, you’re responsible for paying the remaining balance and any interest accruals until your loan is fully repaid.

WHAT ARE THE CONSEQUENCES OF CANCELING YOUR CAR LOAN?

Before you cancel your auto loan, one of the things you need to worry about is how it can affect your credit score. If you return or sell your vehicle to get rid of your loan, it won’t have a significant negative effect on your credit rating. However, you’ll give up an opportunity to improve your credit as you won’t be making monthly payments on that loan anymore.

The situation is different if you voluntarily surrender your car. In this case, you can expect your credit rating to drop substantially because you failed to fulfill your loan agreement. Bear in mind that a poor credit score can greatly reduce your loan approval chances in the future. If you have poor credit and are trying to have a dealership buy out your current loan, we may be able to help you. Reach out to our staff to learn about your options.

WHAT IF YOU DEFAULT ON YOUR AUTO LOAN?

Defaulting on your car loan can have drastic consequences on your financial future, so you should try your best to make your monthly payments on time. A loan default not only causes your credit score to nose dive, but it can also expose you to the risk of vehicle repossession, wage garnishment, or even a lawsuit. If you’re worried about defaulting a car loan, contact our team so we can better understand your personalized situation.

Find Car Loan Financing Help with North Miami Mitsubishi

If you want to terminate your auto loan, consider selling or trading in your vehicle or getting refinancing at North Miami Mitsubishi. Our dealership offers high trade-in values on used vehicles and a wide range of financing solutions that can help you get out of your existing car loan. Contact us today to speak with our knowledgeable and helpful finance experts and learn about what financing options are available and best suited to your unique situation. North Miami Mitsubishi has helped thousands of Florida drivers get answers to their questions and find their next used car. Start the process online or visit our dealership in Downtown Miami today.