海角大神

Making your payment聽month after month has become such a drag that it eventually occurs to you: 鈥淚s there any way I can get out of this loan?鈥�

First of all, what is a bad car loan? The simplest answer is that it鈥檚 one you can鈥檛 afford or one where you鈥檙e paying more than you have to.

You might be wondering if there鈥檚 any way you can keep your car but pay less each month. The answer is, it depends. To explain further, let鈥檚 take a quick look at your loan.

Your car payment is made up of three main parts:

• Principal:聽The balance of the loan, which is the price you paid for the car.
• Interest:聽What the bank or lender charges for loaning you the money.
• Term:聽The amount of time you have to repay the loan.

Of these three parts, the interest and the term can be adjusted to reduce your聽monthly payment. To do that, you need to create a new car loan, a process called聽refinancing.

Review your car loan

To see if refinancing will work for you, begin by finding your sales contract or payment stub. Now, find the interest rate you鈥檙e being charged and the term, or the number of months remaining on the loan.

If you prefer, you can simply call your bank or lender, give them your loan number and ask for this information. They鈥檒l also tell聽you the remaining balance of your current loan, which you鈥檒l need soon.

Once you have found the current interest rate you鈥檙e paying, you can聽check your credit score聽to see what rate you could now qualify for. To get the current interest rate you qualify for, contact several lenders for a quote. If you can get a lower interest rate,聽you鈥檒l be able to lower your monthly car payment.

Run the numbers

To聽see how much money you can save by refinancing, you can use the聽NerdWallet auto loan calculator聽to calculate your monthly payment at the new, lower interest rate.聽At first, don鈥檛 change the number of months left to pay off your loan. Remember, this is the number of months you have remaining on your loan, not the full length of the loan from the beginning.

If lowering the interest rate doesn鈥檛 reduce聽your payment enough, you can consider extending the number of months in your new loan. However, it鈥檚 best not to spread the loan over too much time since you鈥檒l then pay more total interest. Also, if you take too long to pay off your loan, you run the risk of being 鈥渦pside down,鈥� meaning you owe more for the car than it鈥檚 worth.

When not to refinance

If your credit hasn鈥檛 improved, you won鈥檛 qualify for a better interest rate. If you鈥檙e close to the end of your loan, the savings might not be worth the time to go through the process. True, you can still change the length of the loan if necessary. But that鈥檚 a last-resort option.

It鈥檚 also important to make sure there are no prepayment penalty fees in your current loan contract. Most car loans have no such charges, so you should be good to go.

Other options

There are other ways for you to deal with a bad car loan, although these options might not be as attractive as refinancing.

Sell your car to a private party:聽Advertise the car for sale and tell prospective buyers there鈥檚 still a loan on it. Once you find a buyer, call your lender and ask how to arrange the transfer. The new buyer will pay off the loan, and any remaining money will be cash in your pocket 鈥斅爋r a down payment for your next car.

Sell your car to CarMax:聽A quick exit route is to take your vehicle to CarMax. They will appraise your car and give you a solid, no-haggle offer to buy it on the spot. Hopefully, the offer will be more than what you owe on the car. If you accept the offer, CarMax will pay off the loan and give you a check for the difference.

Skip payments:聽Call your lender and explain that you鈥檙e having a hard time making ends meet. Sometimes, the lender will allow you to skip one or more payments to help you avoid聽defaulting on the loan. Save the money from these missed payments and use it to meet your future payments.

Downsize at the dealership:聽You can trade your car in for a less expensive used car. But beware: Dealers can seem to work financial magic but actually are rolling your balance into a longer loan. Before you attempt this, know the trade-in value of your current car and the value of the car you want to buy. Review the contract carefully before you sign, and run the numbers through a calculator to make sure they add up.

Moving forward

If you apply for a new loan and you think you can qualify for a lower interest rate, it鈥檚 time to聽apply to refinance your car loan. Set aside an hour to fill out applications and another hour to review any offers you get. Keep in mind that reducing your monthly payment by even $25 a month will save you $300 a year. Not only that, but you鈥檒l have the peace of mind of knowing you got the best deal possible.

Philip Reed is a staff writer at NerdWallet, a personal finance website. Email:聽preed@nerdwallet.com.

This story originally appeared on NerdWallet.