Car Loan After Divorce
Around 4 in 10 marriages end in divorce within Canada and when a divorce takes place, many find themselves confused about navigating the process of separating finances. An often overlooked consideration in a divorce is what happens with divorce and car loans. With a rising number of consumers opting for auto-financing, knowing what happens to a car loan in a divorce is important for everyone.
At Autorama, we are the used car dealership Toronto residents can count on. We are proud to help our customers drive cars they love with financing options that work for their unique needs. We understand that being informed about car loan divorce options is important to our customers. That’s why we are here to help you feel more informed about divorce car loan considerations and help you feel more prepared to take on whatever comes your way.
What Happens to a Car Loan in a Divorce?
When it comes to discovering what happens to a car loan in a divorce you must first determine whose name is included in the financing document and registration. If only one person’s name is on the loan, then things are not too complicated, that person owns the vehicle and has the right to continue the loan or sell the vehicle and pay it off. If there are two parties involved in the car loan, both parties are equally responsible for the entire amount of the loan regardless of who has been making the payments or who is using the vehicle.
When both parties are involved with the financing of a vehicle, there are two options available to resolve the situation outside of court: either refinancing or selling the vehicle and paying off the loan. Refinancing a car after divorce can be a good option when one party wishes to keep the vehicle, and the other does not.
Refinancing can be looked at as a reset on the auto loan and the party who wishes to keep the vehicle will need to apply for and be approved to finance the vehicle on their own. Keep in mind that refinancing does not simply remove the other party from the loan. If the party who wishes to keep the car has poor credit, looking for a cheap car for sale could be an option that helps to improve the chances of approval.
Our posts, Should You Refinance Your Car Loan? What You’ll Want to Know and Credit and Car Buying 101 provide helpful information to ensure you are more informed about your options when it comes to refinancing a car after divorce.
If both parties do not wish to keep the vehicle due to affordability or do not qualify for refinancing, they can consider selling the vehicle to pay off the loan. When selling the vehicle, individuals should always call their lender and find out their payout amount. It is always beneficial to try to sell the vehicle for as close to your payout as possible, in the event that you cannot get the exact amount, you will have to pay the difference out of pocket.
Divorce can be a difficult situation, even in the most amicable scenarios. At Autorama, we understand the importance of a fresh start and would be pleased to help with the refinancing process. With over 250 vehicles in our indoor showroom, we make it easier to refinance your current vehicle or get you behind a new set of wheels. Call 1(866) 979-2947 today and learn about your options with one of our financing specialists or fill out our online finance application for pre-approval.
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