Should I take out a loan to pay off my upside down car loan?

Should I take out a loan to pay off my upside down car loan?
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#1

I am currently dealing with financial issues and do not know what to do. I only have $3,300 left on my car loan that will be paid off in a year. The payment is $264 and I pay $270. My interest rate is 4.2% because when I bought the car, I had no credit. Since then because I have maxed out my credit cards by being in such a bad financial place my credit has gone to 550-580 range. My car insurance is close to $250 a month too (I have no tickets/traffic violations and have Defensive Driving). I am wondering if it is worth getting a $3,300 loan to pay off the car loan? I have seen rates as high as 45% but repayments less than the car payment and insurance combined ($100 – $150 area). The financial issues I am dealing with will take effect for as long as 6 months and will be paying the amount off sooner than the loan term once I am in a better place. Would it be worth to take out the loan if I can lower my car insurance by dropping the full coverage and then pay off my $270 car payment?


#2

I would recommend going to see a credit counselor to see if they can reduce your credit card payments with a debt management plan. A credit counselor can also go over options that you may be able to take with your car loan. You can find a certified non-profit credit counseling agency by going to the National Foundation of Credit Counseling’s website at www.nfcc.org.
David Atkinson
Certified Credit Counselor


#3

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