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Can You Return a Financed Car Back to the Dealer?

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Returning a vehicle to a dealership isn’t as simple as returning a shirt that didn’t fit right. If you’re in a position where you need to return a car, you may have a few options, but your loan balance plays a key role in what you can do.

Returning a Car to a Dealer

Can You Return a Financed Car Back to the Dealer?The hard truth is that most auto dealers aren’t going to let you return a vehicle that you’re financing. Some dealerships have a return policy – sometimes around a seven-day guarantee when you’re financing a car sight-unseen without a test drive – but most don’t offer one. It won’t hurt to give your dealer a call and ask, but most franchised dealerships don’t have return policies.

When you finance a vehicle with an auto lender, the car’s title has a lien on it, which names the lender as the lienholder. This gives them ownership rights, and prevents you from transferring ownership of the vehicle until the loan is paid off.

Once the loan is complete, the lien is removed and the car is yours. If you need to get out of the auto loan before your loan term is over, you can sell the vehicle privately and pay off the car loan. Selling the vehicle to a private party may get you enough money to remove the lien and relinquish yourself from the auto loan pretty easily. You wouldn’t be returning the car to the dealer, but you can get out of the auto loan this way.

If you try to sell it back to the dealership, they may not offer you enough money to cover your loan balance. Trade-in values are typically less than the actual cash value (ACV) of the vehicle.

If you find yourself in a negative equity position where you owe more on the car loan than the vehicle is worth, you may have a more difficult time selling the car early to repay your loan. However, if you’re in this position, you still may have a way to get out of the loan and get into another vehicle.

Rolling Over Your Auto Loan

Some auto lenders offer loan rollovers. Put simply, you add the remaining balance of your current car loan onto your next one.

It works like this:

You have an auto loan with a balance of $15,000, and you want another vehicle that’s selling for $16,000. You sell your car back to the dealer because it’s not the right fit for you, but the dealership only offers you $10,000 for it. That $5,000 still needs to be paid, so it’s added to your next auto loan balance of $16,000, turning the balance into a grand total of $21,000.

While you got to sell your vehicle and get into something else, you’re starting out a loan with a lot of negative equity. If you need to sell this next car for something else, it means you may have to roll over negative equity again … and maybe again. This is called the trade-in treadmill, and once you get running on it, it’s hard to get off.

Rolling over negative equity onto your next auto loan should be considered one of the last resorts if you really need to sell your vehicle. However, there is one actual last resort if you want out of your car loan.

The Actual Last Resort: Giving the Vehicle Back

If you can’t sell the vehicle to a private party, a dealer won’t buy it, and you don’t have the option to roll over your auto loan, then you may have to consider voluntarily surrendering the car to the dealership.

This is commonly called a voluntary repossession. Voluntary or not, it’s classified as a repossession on your credit reports. Once you return the vehicle, it’s considered a default because you’re no longer making payments. The car is then prepped to be sold at auction, and the proceeds from that are applied to your remaining loan balance. If the loan isn’t completely paid off, called the deficiency balance, you still owe that to the lender.

Having a repossession listed on your credit reports, and the possibility of still owing your lender money after the auction sale, is why a voluntary repo should be considered a last resort. You may be better off to continue making the payments on the vehicle, since a repo can make it difficult to get into another auto loan with most lenders for at least one year.

Refinancing Your Car Loan

If you’re thinking about returning your car to the dealer because you can’t afford the payments, but still want to keep the vehicle, then consider refinancing the auto loan after one year. Most refinancing lenders consider a car loan for refinancing after hitting that one-year mark.

Refinancing is replacing your current auto loan with another one, hopefully with better terms. Nearly everyone that refinances is looking for a more affordable monthly payment. Refinancing can give you the chance to qualify for a lower interest rate than what you initially got, and it could give you the opportunity to extend your car loan, which lowers the monthly payment as well.

To refinance, you must have had your auto loan for at least one year, and lenders typically require that you haven’t had any missed or late payments on the loan. Generally, your vehicle should have less than 100,000 miles and be less than 10 years old to qualify, too.

If you think refinancing is the right path for you, click here for more information.

Need Another Auto Loan?

It can be stressful if you want out of your current car loan, or if you simply don’t want the vehicle anymore. This circumstance can be even more frustrating if you have poor credit. It can be tough to find auto financing with a lower credit score, but we’ve made it easier here at Auto Credit Express.

We’ve cultivated a network of dealerships that spans the whole country, and we want to look for a dealer that’s signed up with bad credit lenders just for you. Get started with zero-obligation and no cost whatsoever by filling out our free car loan request form. We’ll get right to work finding a local dealership that can assist people in unique credit situations.

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AOK seminar to look at outliving incomes

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The North Central-Flint Hills Area Agency on Aging (NC-FH AAA) has announced a new Zoom seminar that provides older Kansans with information on what can happen if people outlive their incomes and how to avoid this situation.

The Answers for Older Kansans (AOK) seminar is scheduled for May 27 at 5:30 p.m.

Paul Shipp, managing attorney at Kansas Legal Services, will present Living Longer and Running Out of Money. Shipp will cover the financial problems that can arise from living longer than you had planned. Topics covered in this presentation include bad credit, reverse mortgages, avoiding credit card debt, and bankruptcy. A handout from Kansas Legal Services on ways to protect your income and assets will be available to those who register.

Registrations must be made by noon on May 27. To register visit ncfhaaa.com/seminars or call 1-800-432-2703.

The seminar is without cost, however, donations that support and expand services for older Kansans, people living with disabilities and their caregivers are welcomed.

Details on how to participate in Zoom technology are available at www.ncfhaaa.com and login instructions will be sent to those who register.

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Can I be denied a job due to bad credit?

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Can I be denied a job due to bad credit?
Image source: Getty Images


People often worry about their credit history when it comes to applying for a new credit card, a mortgage or a car loan. If you have poor credit, should you also be concerned about finding work? Can you be denied a job due to bad credit?

Let’s examine the facts.

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What is bad credit anyway?

Bad credit is basically a negative assessment of your finances based on your history of borrowing. Bad credit implies that you have a bad track record with lenders. This is most likely because you have a pattern of not paying your bills on time or defaulting on your loans.

Is it legal for employers to check my credit report?

Law and finance firms are legally required to perform credit checks on potential employees. However, other kinds of employers can also conduct credit checks on you before they hire you. But they must ask for your permission before they do so.

In many cases, a credit check will be performed by a company if the role you are applying for involves dealing with large amounts of cash.

Why might employers want to check my report?

There are many reasons an employer might want to check your report. For example, they might want to ensure that:

  • You are who you say you are.
  • You have a good track record of managing money.
  • It’s not too much of a risk to let your manage money.
  • Your financial behaviour will not affect your work performance.

Could you be rewarded for your everyday spending?

Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.

Can an employer deny me a job due to bad credit?

Yes. According to credit reference agency Experian, if your prospective employer feels that your current financial situation could impact your ability to perform well in the role, or if your credit history shows poor financial planning, they may decide not to hire you.

Generally speaking, however, employers are more likely to be concerned about serious ‘red flags’ in your credit history, like bankruptcy rather than the odd missed payment.

In any case, employers only get access to your ‘public’ credit report. This contains your electoral roll information and any major red flags such as bankruptcies, individual voluntary arrangements and county court judgments.

They will not have access to your detailed credit repayments or your credit score.

How can I keep my credit history from affecting my ability to get a job?

If a prospective employer runs a credit check on you, ultimately you have no control over what they do with the information, including denying you a job due to bad credit.

The best thing you can do to minimise the impact of your credit on your chances of getting a job is to review your credit report beforehand.

You have the right to one free credit report per year from each of the three credit agencies (Experian, TransUnion and Equifax). Before you apply for a job or attend an interview, request your report and review it for any errors so that you can have them corrected ahead of time.

Even if there are no errors, knowing what is on your credit report puts you in a good position to answer any questions that may arise during the hiring process.

Indeed, if there’s something in your report that employers might consider a ‘red flag’, don’t panic. Instead, begin preparing an explanation to give to them. If it was, for example, caused by financial hardship beyond your control, the employer may take this into account.

Alternatively, you can contact a credit reference agency and request that a notice of correction be added to your report. This is a brief note of up to 200 words in length that explains circumstances that a lender might otherwise question.

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Refinancing Your Subprime Auto Loan

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Refinancing is a wonderful way to save money on your monthly car loan payment – but it can cost you more in the long run if you’re not careful. Refinancing when you have a subprime auto loan isn’t always as easy as refinancing a vehicle when you have good credit. Working with the right lender can help, though.

What Is Refinancing?

Refinancing is when you replace your existing car loan with a different one for the same vehicle, which may have either a lower interest rate, a longer loan term, or both.

Qualifying for a lower interest rate is optimal for getting a lower monthly payment and saving money overall. If you only extend your loan term without getting a lower rate, you actually end up paying more in interest charges over the term of your loan.

Auto loans typically use a simple interest formula, meaning your interest charges add up daily. The longer your loan term, the more you pay the lender – it’s wise to choose the shortest loan term you can afford. If you only extend your loan term you may end up paying more than the vehicle’s value!

Refinancing can typically be done with your current lender or with another one. It’s a good idea to shop around for the best possible rate before going with the first offer you receive. When you shop for the same type of financing with multiple lenders in a two-week timeframe, it’s called rate shopping. When you do this only one credit inquiry impacts your credit score instead of multiple, minimizing the negative impact that hard pulls can have on your credit score.

Options for Bad Credit Borrowers

Taking out a subprime auto loan is a great way to improve your credit, so, if you’ve kept up with your loan to this point and just need a little wiggle room in your budget, refinancing could be for you. Your credit is an important factor in refinancing your auto loan because refinancing is typically reserved for people with good credit.

However, when a borrower already took out a subprime car loan, many refinancing lenders are willing to work with them as long as they’ve made improvements to their credit over the course of the loan. Better credit alone doesn’t qualify you for refinancing, though.

In order to qualify for refinancing, you, your vehicle, and your loan all need to meet the requirements of a lender. These vary, but in order to refinance your car you typically need to meet these qualifications:Refinancing Your Subprime Auto Loan

  • Have a better credit score than when you began the loan
  • Have had your auto loan for at least one year
  • Have an acceptable loan amount
  • Have no more than 100,000 miles on your vehicle
  • Car can’t be more than 10 years old
  • You must be current on your payments
  • There can’t be negative equity in the vehicle

Lenders that refinance typically prefer cars that are in good condition, that aren’t too old, and have lower mileage. Some lenders may not want to refinance a vehicle that’s at risk for breaking down or is depreciating quickly.

They’re generally looking for a loan that isn’t too new, or too close to being paid off as well. And, refinancers may also require that you haven’t missed a payment on your original car loan. A borrower whose current on their loan gives a lender confidence you’ll manage the new loan well.

Alternatives to Refinancing Your Subprime Auto Loan

If you’re not able to refinance your vehicle, you typically still have the option to trade it in for something more affordable. Even if you’re still paying on a loan, all you have to do is pay off the loan to release the lien on the car.

Even if it’s years from the end of your loan term, you may have a good chance at trading in your vehicle, especially now. Due to fluctuations in the auto market, used cars are in high demand currently, which means that dealerships may be willing to pay a higher price to get your used vehicle on their lot – even if you’re a bad credit borrower looking to trade-in.

If you still owe on an auto loan this gives you a better chance at selling your car for the amount you owe to the lender. It may even give you enough cash left over to put toward your next, more affordable vehicle!

Ready to Get Started?

If you think refinancing your subprime auto loan is the way to go, you can check out our resources, here. But, if you think that finding an affordable, used car with a lower monthly payment is the right choice for you, we want to get you started toward your goal today!

At Auto Credit Express, we’ve got a coast-to-coast network of special finance dealerships ready to work with borrowers who are struggling with credit challenges. To get connected to a dealer in your local area that’s signed up with subprime lenders, simply fill out our auto loan request form. It’s fast, free, and never carries any obligation.

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