The average American has about $38,000 in personal debt.
If you’re one of these people, you’re well aware of your repayment obligations. There’s nothing to be ashamed about that. Debt isn’t necessarily a bad thing. It helps you build credit.
However, debt can ruin your financial life if you’re unable to repay it. Your lenders will be on your back till you pay up.
If you’re in this situation, you’re probably looking for ways to get out. Are you considering selling your car?
If you’re asking, “Should I sell my car to pay off other debt?” we’re here to help you make a sound decision. Continue reading for deeper insight.
How Much Is Your Debt?
The first step to determining whether you should turn your car into cash and pay off your debt is to establish your level of debt. How much do you owe?
You aren’t going to sell your car over a $500 debt. This is money you can easily borrow from your friends and repay them when you’re back on your financial feet.
However, if you owe something like $10,000 and you aren’t able to raise the money from your job or business, then you can consider selling your car.
In addition to the amount of money you owe, it’s also important to consider the repercussions of not paying it on time. Is the lender threatening to sue you or repossess some of your assets? Will the lender roll over the loan and slap you with a steep fine?
If the consequences are high, it becomes even more necessary to sell your car. But if the consequences are minimal, say your lender is willing to negotiate an alternative repayment plan, you might not need to sell the car.
How Much Is Your Car Worth?
You could sell your car and still not have enough money to pay off your debt. It all depends on the value of your car against the amount of debt you need to pay.
If you owe $10,000, for instance, and your car is worth about $5,000, selling it might not be a sound decision. Sure, you will raise the money to half the debt, but you will still need to pay the balance within a certain timeframe.
Therefore, establish the value of your car before deciding whether to put it on sale. If it’s an old car that can barely drive, only a junkyard will buy it – and they will likely lowball you. But if it’s a relatively new car in pristine condition, it can fetch a pretty penny in the used car market.
How About Getting an Automobile Title Loan?
You might not need to sell your car, after all.
If you’ve got a clear title and the car has good value, automobile title loans are an option. You’ll raise the money you need to pay off pressing debt, and still get to keep your beloved car. However, you must also service the title loan.
Should I Sell My Car to Pay Off Debt? It Depends!
If you were asking, “Should I sell my car to pay off debt?” you now know that there’s no clear answer. It all depends on the nature of your debts and the value of your car. Plus, you could as well secure a car title loan.
Which way will you go?
Keep reading our blog for more tips.