How to Get Out of an Upside-Down Car Loan…FAST!

I’ll admit that I’ve lost over $15,000 between 2 different car trade-ins, but it was because I wanted a new car, not because I had to get out of the loan. But if you find yourself in the position of owing more on the car than it’s worth, here are some tips to get rid of that car loan quickly.

1. Get a good estimate on your car is worth

There are a ton of sites out there that tell you what they think your car is worth, but you need to get an evaluation from many sources. I advise doing at least the following:

  • Get the True Market Value (TMV) from Be honest with the condition of your car because very few cars will really sell for the “Excellent” price. Most cars are Good or Fair. Same goes for
  • Kelly Blue Book ( Keep in mind though, that these sites are often what vehicles are listing for, not always what they’re selling for. Look at the trade-in and private-party values and know you’ll probably have to settle somewhere in the middle (unless you have a hot car, which depends on the market).
  • Take it to CarMax for a free estimate, if you have one around. They’ll even give you an offer on the spot, but in my experience, it’s often a very disappointing offer. But remember, they’re buying it to resell so they need to make a profit on it. If you’re in a pinch, this is a fast way to sell it, but you need to come up with the remainder to clear the lien on the car.
  • Look at local listings on sites like, and local classifieds to get an estimate of what other cars like yours (make, model, year) and even in the same category (SUV, midsize sedan, truck) are listed for. Remember again that even if something is LISTED for a price doesn’t mean it’s going to SELL for that price.

2. If you don’t have cash, get a loan to pay off the “remainder”

If you’re willing to take the hit on the car and just have to sell, then contact your local bank or credit union to get pre-qualified for a loan to pay off the difference when the sale is ready to happen. You may have collateral you can put up for the loan, or it may be an unsecured, higher rate personal loan, but it’s impossible to finalize a sale when you still owe money on the car. The bank just won’t release the title to you for you to transfer.

3. Make your car nice and shiny

No one wants to buy a dirty car, so pay the $100 or so to get it detailed inside and out. It won’t get rid of dents and big scratches, but it’s been proven that a detailed car will bring in the extra money to at least pay off what you spent on the detailing AND help sell it more quickly. If you’re good enough, you can save even more by doing it yourself.

4. Advertise, Advertise, Advertise!

When I sell my cars, I put it up on and Craigslist. I put window stickers and have even created a webpage for one car (I already pay for the hosting, so the extra $10 for the catchy domain name was worth it). I referenced the ad and my website on craigslist, and vice-versa to make sure people cross-shopped (and I made sure all the sites stayed updated if I changed the price). Also, most important, include flattering photos of the car. Remove any junk or personal items, find a generic location where you won’t have people walking into the shot or other cars crowding in and shoot away. Look at some professional car reviews and how they take photos and try to emulate them.

Once your car is sold, consider buying a very cheap, used, reliable car ($2k or so), or use public transport and rental cars if you have the option. Take the money you’ve saved on that monthly payment and put it towards that loan. If you didn’t have to take out a loan, put it towards a “car fund” and try to pay cash or mostly cash for your next car!


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