How do you get out of a car loan when spouse dies and other spouse can't afford it anymore ?

Sell it for what you owe and pay off the bank loan

Use the life insurance that he left her to pay off the loan if you want to keep the car as transportation. If you don’t want to keep the car, sell it and pay off the loan. If the loan is more than the car is worth, then she may need to finance what’s left. At least it will reduce her payments.

You don’t if your name is on it. You either find a way to pay for it, sell it and hope you get enough to pay off the loan, or it gets repossesed and will affect your credit.

First, my sympathies to your spouse and mother-in-law.

The critical issue is what does the loan agreement say and who signed it? In whose name is the car titled, both of your in-laws or just your father in law?

Is there a provision in the loan that might deal with the death of the borrower? Was life insurance included in the price of the loan and in the loan payments?

Read the loan agreement and see what it says. It’s probably in two point type and written in legalese that is hard to follow but the relevant portions should not be too hard to find.

Is the vehicle worth more or less than the balance on the loan?

This is not an impossible situation and if this was a recent death then there are strong emotions involved here but you should treat it for what it is, a business transaction, and you should gather the information and deal with it in a business-like manner.

SRM

The problem is , there is no estate and he didn’t have enough money to bury him .. She is losing her social security and his monthly pay . He was 74 and still working . She is still working a full time job at 72 ! She will have $2300 a month to live on until she quits work then only $1200 ! Her apartment rent is 950 a month everything included . The car she can’t afford at $355 a month for 4 more years ! It of course is worth less then she owes . We will probably just let it go ! But it is sad…..

I’m quite sure that if one spouse dies the other spouse receives his social security benefits for life. You may want to look into that. It’s federal so it would apply regardless of state. Also why would she be losing her own social security at 72? She should be getting his social security and hers now that he is dead. Sounds like you guys need to pay a hundred bucks or so for an hour of a financial consultant’s time and ideas.

She loses her social security and just gets his , that’s the way it works , you don’t get both. It is really hard when there is no IRA or pension . We are going to have to surrender the car , there is nothing else we can do , I guess…..