Most bad car loans start well before you sign the sales agreement. You make a rushed decision with poor credit in a hot market, life changes, and suddenly a vehicle you hate is steering your entire budget.

One Redditor laid out that exact situation after buying a 2015 Kia Soul in early 2022, when used car prices were already inflated. By the time they asked for help, though, they sensed the answer. And they guessed right.

The driver walked into a car loan with no credit history, which meant limited choices and ugly terms

The loan came in at 18% with a $440 monthly payment.

Two years later, the balance still sits at $16,000. The Soul itself is worth maybe $8,000 to $10,000 on a good day.

That gap is tough enough, but his real financial headache wasn’t the car. It was the insurance bill attached to it.

The driver pays USAA $530 every month to keep the Kia covered

They live in one of the highest-cost insurance regions in the country. Their driving record works against them, too…more than one claim in the last two years.

And it’s a Kia, insured at a time when companies avoided covering certain models like the plague. They shopped around, but only USAA and Geico would even quote them. The difference between the two wasn’t enough to matter.

The twist is that they don’t even need a car anymore. The Soul has spent five months sitting in the driveway. But because it’s financed, he still has to carry full coverage. That means thousands of dollars a year going toward a vehicle they’re not even using.

The whole thing weighs on the Redditor every day.

If this sounds anything like your own car loan, here’s how to get rid of it fast

Their idea was to take out a personal loan, pay off the car loan in full, grab the title, then sell the Soul and use the sale price to knock down the new balance.

Dave Ramsey’s team said that approach lines up exactly with how to dig out of an upside-down loan when you don’t have the cash to close the gap.

Get the lowest interest personal loan you can find

The loan amount is the car loan buyout. Then you sell the car, and toss the money at the personal loan balance.

You walk away with less debt, no required full coverage, and no $530 insurance bill chasing you every month.

It also cuts off the long-term pain of an 18% car note, which is the financial equivalent of leaving a space heater running in the attic and hoping nothing catches fire.

You can also use the freed up funds to either buy a cheap, reliable, used cash car. Be sure to research your options on best and worst used model years, but popular brands are Honda and Toyota.

If you must borrow money to get into your next car, be sure you understand what you can truly afford and enter into a shorter, more favorable car loan term.

In the Soul owner’s case, because they don’t need another car, they’re not forced into a quick replacement. The driver can simply focus on paying down the leftover balance and rebuilding breathing room.

Dave Ramsey’s folks warn drivers not to fall for car loan “hacks” that look easier at first glance

Refinancing usually stretches debt farther into the future. Voluntary repossession can still leave you owing thousands after the lienholder sells your car at auction to a low bidder. Stopping payments leads to the same place with even more fallout.

For underwater car loans, the best option isn’t the most obvious. Use a personal loan only to free the title. Sell the car to the highest (typically private) offer. Attack the smaller balance with whatever you save on insurance and payments.

Once the vehicle and that steep monthly coverage disappear, the rest of your finances finally get to level out.