Can I get out of a car loan without ruining my credit?

car dealership for car loans

Are you struggling to keep up with your car loan payments? You may be wondering if you can get out of a car loan without ruining your credit score. The short answer is yes, you can get out of a car loan without ruining your credit. However, this is only possible if the debt is paid as agreed. In this blog, we will explain everything you need to know about getting out of a car loan without ruining your credit.

Returning your vehicle

You may think that the easiest option will be to return the vehicle to the car dealership, but it’s not that simple. Returning a vehicle to a dealership because you no longer want to pay on the car loan, it’s classified as a voluntary repossession. Voluntary repossession will impact your credit score drastically because it is considered “derogatory marks” on your credit report. However, if you have no other choice it is best to do so because voluntary repossession may hurt your credit score slightly less than involuntary repossession. Repossessions also make it more difficult to qualify for another loan for at least 12 months.

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Get out of a car loan without ruining your credit score

If you want to get out of a loan, but want to avoid ruining your credit score in the process, here are a few things you can try.

Sell the car or trade-in:

One of the ways you can get out of a car loan without ruining your credit score is to sell the car and use the money to pay off your lender. If you want out of your current loan but want another car loan, then trading in your vehicle at a dealership for something else is an option.


Refinancing is the best idea if you want to keep the car but want a different car loan. Car refinancing means taking out a loan to pay the existing balance on an existing car finance loan. If your credit score is better than it was when you originally financed the vehicle, then you may be eligible for more favorable terms such as a lower interest rate. A lot of people choose to refinance to get a lower monthly payment.

Roll over the loan:

If you've bought a car with a car loan then it is possible to enter negative equity during the contract or at the end of it. This means that the car is worth less than the amount of money you have to pay back. Rolling over your negative equity onto your next loan could mean a large balance.

Car brought using a car loan

A Loan Deferment

If you’re simply struggling to make payments right now due to financial issues, you may qualify for a deferment. Many auto lenders are willing to assist borrowers in the event of job loss or other financial circumstances. If you’re struggling to meet payments now, but think you may be able to continue once you’ve sorted out your finances, a loan deferment may be a better option than getting out of the loan all together. Talk to your auto lender to find out more.

Mis-sold car finance claims

If you think you could have been mis sold car finance, we could help you make a free claim. The majority of our customers weren't aware they were mis-sold their car finance until our experts checked their finance agreements. Contact one of our expert claim handlers to find out more and start your claim today.

Free car finance claims Manchester - PCP Claimsline

Tel: +44 333 358 2131
Address: Bank Chambers, 93 Lapwing
Lane, Manchester,
United Kingdom,
M20 6UR