When you agree to buy a car with a car loan, you are promising to pay back to a certain bank, not only the amount of the loan, but interest on it, too. A repayment plan for the loan usually lasts between three and five years. However, it is difficult to back out of a car loan agreement. Your best bet is to pay back the bank. If you do not have the money to pay the balance of the loan, you have a problem. Your best bet is if the car was just purchased.
Step 1
Call the dealership and tell them you have changed your mind and do not want the car. If it is within the first few days of the purchase, you sometimes can get them to take the car back if you have used only a nominal amount of miles on the vehicle. If they agree to take the car back, then canceling the loan is a simple matter of returning the money.
Step 2
Call the bank and explain the situation. Tell them that you have changed your mind and do not want the car. Tell them that the dealership has agreed to take the vehicle back and that the money will be returned to them. Most loans do not have penalties for early payoff, and this is essentially what you will be doing.
Step 3
Pay the interest that has accrued with the loan for the amount of time you have had it. This will more than likely have to be done if the bank has issued the payment to the dealership. The interest on car loans is broken down into daily amounts, so the amount of interest that you owe with in the first few days of the loan will steadily increase the longer you have the loan. If you make a monthly payment, the interest will reset to zero and start to increase daily again. The repayment of the original loan amount will come from the dealership as a refund to the financial institution after you return the car to the dealership. This is due to the fact that the loan payment was sent directly to the dealership when you purchased the car, and since you are returning the car to the dealership, the loan amount will need to be returned from the dealership to the financial institution.