Financial Advice Q&A

New Member
dhart4
Posts: 1
Question
I refuse to keep paying on a car loan. What can I do?
[ Edited ]

I have a third car that is on my name but is in another state from where I currently stay and I can't afford to make anymore payments. The car loan is from Capital One, and since I'm in the military, they wont repo it. I am a few months behind but I can be current if I have to but I am refusing to pay anymore money on the car. What can I do get rid of the car. I have tried to put it up for sale on care sale sites but no replies in months, NO family member wants to take over payments and the dealership won't buy it back. Is there somethin out there that I can try or can be done to help with my situation?

Other Answers: 1
Community Manager
ScottHalliwell
Posts: 888

Oh boy.  I’ve got to admit that when I first saw your question, I wasn’t going to answer it online because I was a little taken aback. 

 

I couldn’t stop thinking, “How did this guy get to the point where he refuses to keep paying on a car loan?  Doesn’t he realize that this will wreck his credit score, making it very difficult for him to borrow money for years down the line and even potentially having a negative impact on his military security clearance? Isn’t he concerned about the ethical implications of this decision? After all, he entered into an agreement with Capital One in which they lent him money to buy the car. They legally lent him the money and he legally agreed to pay it back. Surely he knows what a bad idea this is…right?”

 

But then I got to thinking, maybe these points aren’t so obvious to people who don’t do what I do for a living.  After all, we get lots of similar questions so there’s a real possibility that some folks out there don’t fully comprehend what happens when they borrow money – for a car, on a credit card, or otherwise – and don’t pay it back. 

 

So with this in mind, I thought I’d share my thoughts.  Let’s start with the big picture and address your point that you refuse to pay more for this car.

 

You borrowed it, right?
Here’s what I would tell one of my sons if they made a similar statement or posed a similar question: If you borrow it, pay it back. Now, I don’t have all the details of your situation and I apologize if this sounds a bit harsh, but this situation is really about that simple.  If you borrowed the money, you should pay it back if you can – even if you don’t want to.

 

How would you feel if you lent money to someone and they decided not to pay you back? Fortunately, in our society (with very few exceptions) this is frowned upon. No one has the right to take money from someone else, or a company, and not give it back. But by not paying your loan back, that’s exactly what you’re doing...and it has consequences. At the very least, your credit score will be destroyed and it will take a very long time and a lot of work to bring it back up. All the while, you’ll pay higher interest rates than more credit-worthy people and you may even be denied things they’ll be able to get.  Trust me, you really don’t want to do this if you can avoid it.

 

So let’s look at how you might handle this differently.

 

A different approach?
First, to keep you credit score from falling through the floor, you need to catch up on the back payments on the loan.  You’ve already done a good deal of damage to your score by falling behind but getting caught up should stop the bleeding. Then, keep the payments current until you find a way to get rid of the car.

 

Next, understand that everything has a selling price.  If you drop the price far enough on your car, someone will buy it.  Of course the problem this creates for you is that the acceptable sales price is probably less than what you owe, right?  Assuming this is correct, you’ll need to come up with the difference.  Maybe that happens by saving money each month, finding an additional source of income (if possible), or selling something else you own.  The source doesn’t matter.  Accumulating the extra funds you need to pay off the loan does.

 

Finally, once you’ve accumulated an appropriate sum, drop the price until you find a buyer. Combine their money with what you’ve saved and get out from under the car and the loan once and for all. 

 

To be clear, there’s nothing fun about this situation or my proposed solution. Nobody wants to come up with more money to get rid of something they no longer want.  But sometimes that’s just what you’ve got to do to keep up your end of a deal…and keep your financial credibility intact.

 

Thanks so much for your question.  I truly do hope this is helpful and I wish you all the best!

 

Scott

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