How To Pay Off A Car Loan With Someone Else’s Money

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I had just gotten a raise at work, a new-to-me home, so naturally I let the that lifestyle creep set in. Why not add a new-to-me car to the mix? After all, my SUV at the time just didn’t have that curb appeal I wanted it to. I went out, traded the SUV into the dealer, and left with a truck. This mentality had ruled my life a few years prior, and kept me in a bad financial decision making cycle.

The truck in question was a 2000 Toyota Tundra. I justified the purchase by telling people I could also use it for my side gig. Yup, this was a pure “Keeping Up With The Jones” purchase. They got me. I left the dealers wondering if I’d made a good decision buying a 15 year old car for about $12,000, but something about that high seating position and the look of it just kept me going. I’d also always liked trucks, so being able to finally get financing for one went to my head.

A year into my ownership, the honeymoon was over. The truck was in the shop several times for daily maintenance repairs and I noticed just how much I didn’t really need it in my life. It was used for side gig duties maybe 3 times, and having an older vehicle comes with it’s own mechanical and physical drawbacks. A few more months go by and I keep making making the payments because, you know, I just needed a big manly truck in my life. After a short while, my perspective about life changed and I wanted my actions to align with my ultimate goals. If I want to invest in myself and other assets, there’s no need for me to be paying off something that i don’t need. First thing I did was calculating the costs of owning this truck. The number came out to about $365/month. Having that money come to me every month would allow more more investment opportunities and to make matters worse, 2 years into the ownership, I was still underwater on the loan. After a down payment, a trade-in and about 2 years of payments, I stilled owed the bank about $6,800 but the truck was worth between $3,000 to $4,000. It was time to take action against this loan.

From my research I found there are many ways to get out of a car loan. My options were to pay the whole thing off month by month till the end or find someone who was willing to take over the balance. Being under water on the loan, I didn’t want to keep paying on it, so I chose the second option. The managers at my bounce house side hustle have needed a reliable truck for years, so I reached out to them to buy it. After a few negotiation rounds, we decided for the truck to be sold at $4,000, paid to me in installments. I’d have to cover the remaining balance of approximately $1,800. They wrote checks out to me that I deposited on the loan, and within 4 months, they paid off the negotiated price. For the last payment, I added some of my money to cover the balance, went to the bank and deposited it all. The teller congratulated me for paying the loan and I left feeling a lot of weight off me.

Having someone else pay off a loan is very tricky. There needs to be a great amount of trust between the buyer and seller or it could all go south, but there are many ways to mitigate most of the issues that could come up. Third party legal entities and having some liquid funds as leverage can be helpful. If you would like to pay off a car loan, determine if this is something you would like to do, build your leverage, and reach out to people that are willing to take over and be ready to have weight taken off.

I’m so happy to be done with car loans and I hope I never have to take one on. The next time I need to get a car, I’d like it to be with cash on the used market, and that money will come from my me fund that I’m growing. Every single car loan under water should be paid off as soon as possible. Know that there are many ways to do it and many people willing to take it over.