Stuck with an unaffordable car loan? Let’s walk through your options.

Key takeaways:

• Start with the basics: What you owe, your rate, and what your car is worth
• Refinancing can help lower your rate or monthly payment if your credit has improved.
• If the payment no longer fits, consider a more affordable vehicle.
• Reaching out to your lender early can open up more options.

If you’ve ever looked at your car payment and thought, "How did this get so high?", you’re in good company. This situation happens more often than you’d think, especially if the market has high rates and expensive vehicles.

However, you do have options. Let’s go through what makes sense in different situations.

Review your financial situation 

Before you make any decisions, look at your car loan to find out:

• How much you still owe
• Your interest rate
• Your monthly payment
• How many months are left
• What your car is worth today

At this stage, many people find out they owe more than the car is worth, especially if they have a longer loan term or higher interest rate.

Refinancing

If you like your car and just wish the loan felt more manageable, refinancing is often the simplest place to start.

Refinancing means swapping your current loan for a new one, ideally with a lower interest rate or shorter term.

When refinancing makes sense

If these three statements are true since you first applied for the auto loan, refinancing could be a good option:

• Your credit has improved.
• Rates have come down a bit.
• You’ve made steady, on-time payments.

If you can refinance for even a slightly lower rate, it can easily add up over time.

 Tip: This free auto loan refinance calculator can help you compare your options.

What to keep in mind

Loan term: If you extend your loan term when refinancing, your monthly payments may go down but you could end up paying more interest over the full loan.

Depreciation: If your car is worth less than the full loan because it's lost much of its value or you purchased it without a down payment, it may be hard to find a lender to refinance your loan.

If you decide to refinance your auto loan, Elevations offers an 0.25% APR* discount for members with a Peak Perks or Summit Dividend Checking account.

Reaching out to your lender

Many people don't reach out to their lender until they’ve missed a payment to reach out, but doing so earlier can help.

Depending on the lender, there may be options like:

• Moving your payment due date
• Deferring a payment
• Setting up a short-term hardship plan
• Adjusting the loan structure

Adjusting your current loan may not be a permanent fix, but it can give you some breathing room while you sort out a longer-term plan.

What if the car is no longer in your budget?

Sometimes the vehicle cost is more of an issue than the interest rate. In that case, it might be worth looking at switching to something more affordable.

Trading in

You can apply your current car’s value toward a different one with a lower price point. This can lower your monthly payment, but there are a few things to watch:

• If you owe more than the car is worth, that balance may carry over to the new loan.
• Consider how fees and costs will add up.

This option tends to work best when the next vehicle is meaningfully less expensive.

Selling the car outright

When the value of the car covers your remaining loan balance, you can sell it, pay off the loan, and move on without ongoing payments.

If the value falls short, you’d need to cover the difference somehow, either with savings or by rolling it into another loan.

Private sales often bring in more than dealer trade-ins, which can make a difference if you’re close to breaking even.

Tip: If you decide to sell, this free car affordability calculator can help you plan your next car purchase.

What to avoid

When you're looking at your options, here are three things to steer away from:

1. Looking only at the monthly payment
   Lower sounds better, but it doesn’t always mean you’re paying less overall.

2. Stretching the loan too far
   Longer terms can keep you in the loan longer than the car holds its value

3. Waiting too long to explore options
   You’ll usually have more flexibility if you act before payments become a problem.

Want to talk through your options? The Elevations team can help you work through your specific situation during a free appointment.

Bringing it all together

If you’re feeling stuck with a high auto loan, there are steps you can take to come to a decision:

• Look at your current loan and what your car is worth.
• See how refinancing might affect your monthly payments and total loan
• Reach out to a lender to go over your options.
• Consider whether keeping the car still makes sense.

Ultimately, it's important to act in line with what will make your budget feel more manageable over time.