Strategy to pay off car loan before selling the car
As far as ease of sale transaction goes you'll want to pay off the loan and have the title in your name and in your hand at the time of sale.  Selling a car private party is difficult enough, the last thing you want is some administrivia clouding your deal.  How you go about paying the remaining balance on the car is really up to you.  If you can make that happen on a CC without paying an additional fee, that sounds like a good option.
My family members, particularly my aunt (his daughter), are telling me that when my grandpa dies they are taking my car. Bring this up with Grandpa.  If this is what he wants to have happen, then help him make it happen before you finish paying $12,000 on a car worth only $6,000.  Let the Aunt and other relatives deal with the remaining $12,000. If that isn't what he wants to have happen, then work out how you and he can legally make sure that what he wants to have happen actually happens. If the Aunt or others bring it up, make sure they understand that you still owe $12,000 on the car, and if they get the car they also get the loan.  If they refuse to pay the loan then make sure they know you will cooperate with the bank when they attempt to repossess the car - up to and including providing them with keys and location. This will hurt your credit, and you will be on the hook for the remaining portion of the loan, but you at least won't have to deal with all of it - they'll sell it at auction and your loan amount will fall a little. But the best course of action is to work with Grandpa, and make sure that he understands the family's threats, how that will affect you since you're on the loan, and what options you'd like to pursue. Everybody on the car title will need to participate in the selling process. The person who is buying the car will need everybody to sign the paperwork so that nobody months later tries to say they never agreed to sell the car. The money will have to be sent to the lender to pay off the rest of the loan. If the money isn't enough to pay off the loan everybody will have to decide how the extra money will be sent to the lender. This will have to be done as part of the selling process because the lender doesn't want you to sell the car and keep the cash. Once the car is gone so is the collateral and they can't take it back if you miss payments.  If the cousin is too far away to participate in the selling of the car, you may need the buyer and the lender to tell you how to proceeded. If you are selling at a dealership they will know what documents and signatures will be needed, the bank will also know what to do. If the loan is almost paid off it may be easier to pay the loan first, and then get the title without the lenders name before trying to sell it. "Let's assess the situation first, then look at an option: This leaves you with about $1,017/mo in cash flow, provided you spend money on nothing else (entertainment, oil changes, general merchandise, gifts, etc.) So I'd say take $200/mo off that as ""backup"" money. Now we're at $817/mo.  Question: What have you been doing with this extra $800/mo? If you put $600/mo of that extra towards the 10% loan, it would be paid off in 12 months and you would only pay $508 in interest. If you have been saving it (like all the wisest people say you should), then you should have plenty enough to either pay for a new transmission or buy a ""good enough"" car outright.  10% interest rate on a vehicle purchase is not very good. Not sure why you have a personal loan to handle this rather than an auto loan, but I'll guess you have a low credit score or not much credit history.  Cost of a new transmission is usually $1,700 - $3,500. Not sure what vehicle we're talking about, so let's make it $3,000 to be conservative.  At your current interest rate, you'll have paid another $1,450 in interest over the next 33 months just trying to pay off your underwater car.  If you take your old car to a dealership and trade it in towards a ""new to you"" car, you might be able to roll your existing loan into a new loan. Now, I'm not sure when you say personal loan if you mean an official loan from a bank or a personal loan from a friend/family-member, so that could make a difference. I'm also not sure if a dealership will be willing to recognize a personal loan in the transaction as I'd wager there's no lien against the vehicle for them to worry about. But, if you can manage it, you may be able to get a lower overall interest rate. If you can't roll it into a new financing plan, then you need to assess if you can afford a new loan (provided you even get approved) on top of your existing finances. One big issue that will affect interest rates and approvals will be your down payment amount. The higher it is, the better interest rate you'll receive. Ultimately, you're in a not-so-great position, but if your monthly budget is as you describe, then you'll be fine after a few more years. The perils of buying a used car is that you never know what might happen. What if you don't repair your existing car, buy another car, and it breaks down in a year? It's all a bit of a gamble. Don't let your emotions get in the way of making a decision. You might be frustrated with your current vehicle, but if $3,000 of repairs makes it last 3 more years, (by which time your current loan should be paid off), then you'll be in a much better spot to finance a newer vehicle. Of course it would be much better to save up cash over that time and buy something outright, but that's not always feasible.  Would you rather fix up your current car and keep working to pay down the debt, or, would you rather be rid of the car and put $3,000 down on a ""new to you"" car and take on an additional monthly debt? There's no single right answer for you. First and foremost you need to assess your monthly cash flow and properly allocate the extra funds. Get out of debt as soon as reasonably possible." "Seems to me you don't have a ton of great choices, but of them: Keep going as you are.  If/when the car becomes unusable without significant expenses, stop using it.  Buy another junker and use that to get by until your loan is paid off.  From now until then, put aside a few hundred (or whatever you can, if more) each month towards the anticipated purchase.  When you do buy this junker, pay in cash - no loan.  Just get something that will take you to work, and that includes ""bike"" if that's a possibility.  When you can, sell the no longer usable car to finish paying off the loan. Start aggressively paying off the current loan, with the eye of getting it down to where you're not underwater anymore.  Then sell the car and dispose of the loan, and buy a better replacement.  Scrimp and save and cut everything - eat cheaply (and never out), cut your personal expenses everywhere you can.  If you get another $250 a month towards principal, you can probably be no-longer-underwater in about a year. Get a personal loan today for the amount that you're underwater, and immediately sell the car.  This gets you out of the loan and car the quickest, and if you think the car will devalue significantly between now and when you might be not underwater anymore, this might be the best option.  But it's the most expensive, likely - you'll pay 12% to 20% on the difference.  Now, 12% of $5000 is less than 5% of 15000, so it might actually be a good financial deal - but you'll probably have to shop around to get 12-15% with a 660 (though it's probably possible).  You'll still be without a car at this point, though, so you'd have to buy another one (or live without for a while), and you'd still have a payment of some sort, but perhaps a more manageable one ($5000 @ 12% @ 5 years means something a bit over $100 a month, for example.) I recommend that if you can get by without a car for a while, option 2 is your best bet.  All of these will require some financial care for a while, and probably cutting back on expenses for a year or two; but realistically, you shouldn't expect anything else.  Get a budgeting app if it will help see how to do this. As far as getting out of the loan without paying it, I don't recommend that at all.  Your credit will be ruined for at least seven years, and 660 is not bad at all really, and then would take  yet more years to recover.  You will likely be sued for the balance plus collection costs, beyond repossession.  The consequences would be far, far worse than just paying it off, and I mean that financially as well as ethically." The other answers have offered some great advice, but here is an alternative that hasn't been mentioned yet. I'm assuming that you have an adequately-sized emergency fund in savings, and that your cars are your only non-mortgage debt. Since you still have car debt, you probably don't have anything saved for buying a new car when your current cars are at the end-of-life. Consider paying off your car loans early, then begin saving for your next car. Having cash in the bank for a car is very freeing, and it changes your mindset when it comes time to purchase a car, as it is easy to waste a lot of money on something that depreciates rapidly when you aren't paying for it immediately.  This approach might be counterintuitive if your car loan interest rate is less than your mortgage rate, but you will probably need another car before you need another house, and paying cash for a car is worth doing. This is what your car loan would look like if you paid it off in 14 months at the existing 2.94% rate: You'll pay a total of about $277 in interest.   If you do a balance transfer of the $10,000 at 3% it'll cost you $300 up front, and your payment on the remaining $5,000 will be $363.74 to pay it off in the 14 month period.  Your total monthly payment will be $1,099.45; $5,000 amortized at 2.94% for 14 months plus $10,300 divided by 14. ($363.74 + 735.71).  Your interest will be about $392, $300 from the balance transfer and $92 from the remaining $5,000 on the car loan at 2.94%. Even if your lender doesn't credit your additional payment to principal and instead simply credits future payments, you'd still be done in 15 months with a total interest expense of about $447.  So this additional administration and additional loan will save you maybe about $55 over 14 or 15 months. what you aim to do is a great idea and it will work in your favor for a number of reasons. First, paying down your loan early will save you lots in interest, no brainer. Second, keeping the account open will improve your credit score by 1) increases the number of installment trade lines you have open, 2)adds to your positive payment history and 3) varies your credit mix. If your paid your car off you will see a DROP in your credit score because now you have one less trade line. To address other issues as far as credit scoring, it does not matter(much) for your score if you have a $1000 car loan or a $100,000 car loan. what matters is whether or not you pay on time, and what your balance is compared to the original loan amount. So the quicker you pay DOWN the loans or mortgages the better. Pay them down, not off! As far how the extra payments will report, one of two things will happen. Either they will report every month paid as agreed (most likely), or they wont report anything for a few years until your next payment is due(unlikely, this wont hurt you but wont help you either). Someone posted they would lower the amount you paid every month on your report and thus lower your score. This is not true. even if they reported you paid $1/ month the scoring calculations do not care. All they care is whether or not you're on time, and in your case you would be months AHEAD of time(even though your report cant reflect this fact either) HOWEVER, if you are applying for a mortgage the lower monthly payment WOULD affect you in the sense that now you qualify for a BIGGER loan because now your debt to income ratio has improved. People will argue to just pay it off and be debt free, however being debt free does NOT help your credit. And being that you own a home and a car you see the benefits of good credit. You can have a million dollars in the bank but you will be denied a loan if you have NO or bad credit.  Nothing wrong with living on cash, I've done it for years, but good luck trying to rent a car, or getting the best insurance rates, and ANYTHING in life with poor credit. Yeah it sucks but you have to play the game. I would not pay down do $1 though because like someone else said they may just close the account. Pay it down to 10 or 20 percent and you will see the most impact on your credit and invest the rest of your cash elsewhere. Get rid of the lease and buy a used car. A good buy is an Audi because they are popular, high-quality cars. A 2007 Audi A4 costs about $7000. You will save a lot of money by dumping the lease and owning. Go for quality. Stay away from fad cars and SUVs which are overpriced for their value. Full sized sedans are the safest cars. The maintenance on a high-quality old car is way cheaper than the costs of a newer car. Sell the overseas property. It is a strong real estate market now, good time to sell. It is never good to have property far away from where you are. You need to have a timeline to plan investments. Are you going to medical school in one year, three years, five years? You need to make a plan. Every investment is a BUY and a SELL and you should plan for both. If your business is software, look for a revenue-generating asset in that area. An example of a revenue-generating asset is a license. For example, some software like ANSYS has license costs in the region of $30,000 annually. If you broker the license, or buy and re-sell the license you can make a good profit. This is just one example. Use your expertise to find the right vehicle. Make sure it is a REVENUE-GENERATING ASSET.