Upside down on car loan, sell and refinance gap?

Question

In order to cut down our monthly expenses we are looking to sell our car. We still owe $12,000, kelley blue book says its worth around $10,000 and we don't have $2000 lying around to cover the gap.

If we sold the car and used the money to pay down the loan, would we be able to continue making payments on the $2000 balance until it is payed off?

If not, is there a good option (other than a personal loan) to refinance the balance in order to reduce the monthly cost, thereby accomplishing or primary goal?

Answer 1

If we sold the car and used the money to pay down the loan, would we be able to continue making payments on the $2000 balance until it is payed off?

That depends on the loan you have. If the loan is secured by your car like most auto loans, it would have to be converted to a different loan, probably unsecured (resp. refinanced with it). That probably leads to a higher interest rate because of higher risk for the lender.

If not, is there a good option (other than a personal loan) to refinance the balance in order to reduce the monthly cost, thereby accomplishing or primary goal?

If you don't have the money, you'll have to take a loan in one or another way, be it with your credit card or, as you phrase it, with a personal loan.

As you have a 2nd car, it might be possible that you use this as a collateral for your lender. This way, you might be able to keep the lower rates.