Car Loan After Divorce
4 in 10 marriages end in divorce within Canada. With a rising number of consumers opting for auto-financing option while purchasing a vehicle, it begs the question:
What happens to the car loan during a divorce?
First, you must 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, there are two options to resolve the situation outside of court: Refinancing. When one party wishes to keep the vehicle and the other does not, you can always have the vehicle refinanced. Refinancing is not as simple as removing one of the applicant’s name off of the current loan; it involves the process of financing to start from the beginning with the intended owner of the vehicle being a sole applicant.
If both parties do not wish to keep the vehicle due to affordability or do not qualify for refinancing, you can sell the vehicle to pay off the loan. When selling the vehicle, you should always call the lender and find out your payout amount. It is always beneficial to try to sell the vehicle for as close to your pay out 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 hard for everyone but sometimes it is for the better. Autorama understands the importance of a fresh start and is more than capable to help when it comes to the refinancing option. With over 250 vehicles within an all indoor showroom, not only is it possible to refinance your current vehicle but perhaps even putting you behind a new set of wheels for a new beginning. 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 a pre-approval!