We’ve all done it. You purchase something and wish that you could reverse the decision. It’s relatively simple to return a pair shoes. You’re in a tougher situation if you have to finance a large item like a vehicle. Can you really return it to the seller? You can’t, but you have options and scenarios to consider. Let’s explain it in plain and simple terms.
Dealer Return Policies
Let’s first talk about dealer returns policies. Some dealers, such as CarMax or Carvana offer a small return window. This is usually between 7-10 business days. This is similar to a “trial period”.
Not all dealers do this. If they do offer this, it is usually with conditions. If you want to return the car, it must be in exactly the same condition as the day you bought it. You may be out of luck if it has any kind of damage or a scratch. Moral of the Story? Before you sign any documents, always ask about return policies.
What If Your Car Is a “Lemon”?
What if the problem is your car and not you? Lemon laws are in place to protect you if your car has major defects and the dealer or manufacturer cannot fix them, despite multiple attempts. The laws differ by state, but are generally there to prevent you from getting stuck with a bad car.
You can find out what you need to do if you believe your car is a lemon by contacting the Attorney General in your state. You might be able get a vehicle replacement or refund if you are eligible.
Repossession of Property Voluntary
But what if your financial situation is more important than the car? Your financial situation may have changed or the payments might be too high. The voluntary repossession is one option. This is when you give your car to the lender, rather than wait for them to take it.
The breakup might not sound clean, but it is. The fact is, this will appear on your report. And here’s the worst part: If you sell the car for less than the amount you owe, you’ll still be responsible for that difference. It’s like the “it isn’t you, it is me” of auto financing.
Alternatives for Returning Your Car
There are other alternatives if you do not have a lemon law or a return period.
1. Buy the car
One way to cover your debt is to sell your car to a buyer privately. Keep in mind that the value of cars can depreciate very quickly. You will need to cover the difference between the loan balance and the price you can get for the car if the loan is more than the selling price.
2. Trade-It-In
You can also trade your car into a dealership. The trade-in value can be used to purchase a car that is less expensive or you can downsize your vehicle in order to reduce payments. Negative equity is usually rolled into a new loan if your current vehicle is worth less than you owe.
3. Refinance
You can refinance your car if you’re struggling to make the payments but want to keep it. It involves obtaining a new loan that has better terms. For example, a lower interest rates or a longer payment period can help make the monthly payment more manageable. You should be aware, however, that the interest rate on a loan extension could increase over time.
4. Request Hardship Assistance
You can ask your lender for help if you are facing a temporary financial crisis. You may be able to temporarily defer payments, or restructure the loan to get you back on track.
What Are Your Credit Options?
Whatever you decide, keep in mind the impact on your finances and credit rating:
- Returning The Car
- Selling You may lose money if the car’s worth does not cover your balance.
- Refinancing : This may bring relief on a monthly basis, but it could cost you more over time if the term of the loan is extended.
- Hardship plans : These are designed to help you get by without damaging your credit score, so long as you follow the new terms.
Before You Act
You should do some research before returning a car you have financed.
- Read all the fine print: Review your loan and purchase agreements to see if there are any clauses regarding cancellation fees or return policies.
- Crunch Numbers : Run the numbers to see what each option costs, from the refinancing fee to the balance that you could owe if you sell the car.
- Seek Help – Talk to a lender, financial advisor or even an attorney if you need it. They can help you make the right decision for your circumstances.
The Bottom Line
Returning a financed vehicle isn’t always easy and often it’s not the quick fix people hope for. You can plan ahead and find a way forward that will work for you, your finances, and your future. You can find a solution, whether you’re looking to sell, trade, refinance, or explore hardship options. You can do it. Just take one step at a given time. This is your time.
