How to get out of a car loan in 2026

A layoff, illness, unexpected repairs or other financial hardship can easily throw off your budget and make you fall behind on car payments.

In most cases, it's just a short-term setback. But if you're continuing to struggle, it might be time to get out of the loan. In early 2026, subprime auto loan delinquencies hit their highest level since 1994.

There are several legitimate ways to end a car loan without defaulting, which can tank your credit and result in repossession.

If you're experiencing financial difficulties, your lender may be willing to change your payment schedule. It will typically cost you more in the long run, but it could be helpful if you're facing a temporary hardship, like a family illness or household expense.

Your lender may be willing to adjust your payment date or defer one or two payments. The loan will still accrue interest, but it could help you avoid missing more payments or defaulting, which could wreck your credit score and lead to repossession.

According to the Consumer Financial Protection Bureau, some lenders allow borrowers to defer principal on their payments and pay only interest.

If you've already fallen behind for several months, a payment plan could help you catch up.

Debt relief companies don't handle auto loans, but If you're juggling more than car payments, they can negotiate reduced balances on your credit card bills and other unsecured debts. That can save you money and free up more funds to pay down your car loan.

If your circumstances have changed since you initially took out the loan — like your credit score has increased — you may qualify for a lower interest rate by refinancing your car loan. Adding to the length of your car loan could also lower payments, though it would mean paying more in interest over time.

Make sure you find the best deal by getting quotes from your current lender and other companies.

Some lenders offer prequalification, which can help you estimate your monthly savings without a hard credit inquiry that could hurt your credit score. Car loan marketplace Autopay accepts applicants with a credit score of only 550 and financing starts at 4.67% APR, considerably lower than the industry average.

Capital One Auto Finance also lets borrowers prequalify online without a credit check— and approval decisions can be made in under 24 hours. Interest rates start at 5.00%, with terms ranging from less than 12 months to 84 months.

There's no application fee and Capital One approves borrowers with co-signers and with credit scores as low as 540. There is a $7,500 minimum for refinancing, though, and your original loan can't be with Capital One.

Selling your car won't make your loan disappear, but you can use the money to pay off your balance. Contact your lender to see how much you need to pay to fully satisfy your loan, then look up your car's value on Kelley Blue Book or Edmunds.

If your car be worth less than the payoff amount (a situation known as an upside-down loan) you'll need to pay the difference in cash or take out a personal loan.

By using non-traditional factors like employment and education, lenders on Upstart consider borrowers with credit scores as low as 300.

If you're unable to make payments and don't see your situation changing, a voluntary repossession (sometimes called a surrender) may be your best choice. It will impact your credit score similarly to an involuntary repossession and stay on your credit report for up to seven years.

But future lenders may view it a little more favorably when they review your credit history, according to Experian. And you'll avoid the stress of having your vehicle seized, as well as the fees associated with it.

If you agree to a voluntary surrender, you would turn your car over to your lender, who would sell it and apply the proceeds toward your payoff. You'll be responsible for any amount the sale doesn't cover or the balance could go to collections. If your lender forgives the outstanding balance, it will be taxed as income.

If you're already struggling with monthly car payments, paying off the loan in full might seem like a pipe dream. But it's a quick way to save on interest, protect your credit score and reduce your debt-to-income ratio. And while on-time loan payments help bolster your credit score, that's not a consideration if you're making late payments or at risk of defaulting.

You might consider taking out a personal loan with a lower APR or asking a friend or family member to lend you the money.

See if your lender charges a prepayment penalty and if it's worth paying it to get out of your auto loan.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every auto article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of auto loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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