Just a little bit of knowledge about the auto market would help you to take an informed decision when you want to buy a car while still being in debt. You may be smart enough to choose a used car for the purpose of keeping the monthly bill low as used cars often come at a very low price but are as good as a new car. You also own a car or higher retainable value as the bulk of the depreciation would already be borne by the previous user.
Look For Incentive
When you are looking for a new car, you should look for offers, deals, and incentives which would keep the price of the car considerably lower than the actual and you would have to take a smaller loan and pay smaller monthly bills. It often happens that cars that do not sell quickly are required to be stacked at the dealer’s showroom utilizing space and preventing other newer and better modes to store. In such cases either the manufacturer gives incentives to the dealers to make the sale or the dealer offers you a huge discount to you. You win both the ways and maybe the amount thus saved may be enough to pay off your outstanding loan.
Encompass The Old Loan
The car dealer would be happy to arrange for a bigger loan for your new car so that you can encompass the old loan into it. This way you can clear you old loan much faster than required but you must take care to find out whether or not you are arriving at the same situation if you want to roll back your upside down car loan. You should carefully consider such an option as it may adversely affect when there is any accident, and the insurance company would provide coverage for the value of the car and nothing extra.
Refinance Your Loan
If you have a car which is running in perfect condition and want to retain it, you can take out a home equity loan to refinance it. If it has a lower rate of interest, then you can have enough money to even make some extra payment by opting for the repayment schedule of the car. This way you can make your negative equity, if any, better and clear it off faster. This is a very suitable option if you have a very bad credit as repaying your loan in such a manner may better your credit score which would help you to get a fresh loan to buy a new car.
Get All Loans Cleared
When you have multiple loans or are struggling with credit card debt but you have already chosen a car model from a dealer, then you would be suggested by the credit counselor to clear all your debts first before applying for a fresh loan. Therefore, try to keep your debt within the manageable limit so that the creditor can see your good intention and may consider giving you a loan to get a new car, with some suggestions, riders, and advice as well.