Consolidating Debt with a Car Loan
Sometimes consolidating debt within a car loan or other automatove financing options is easier to get approved than simple debt consolidation loans or a line of credit.
Consider This
When a bank assesses an individual seeking to consolidate their financial obligations,
they take into account the person's complete financial picture, considering various risk elements. Unlike secured loans such as car loans,
consolidation loans typically lack collateral. Through consolidation, multiple debts are merged into one, ideally featuring a lower interest rate.
In this context, a bank usually doesn't have a significant incentive to provide a reduced interest rate for debts that the individual is already servicing at higher rates
- Car loans usually have a lower interest rate when compared to the standard 19.99% credit card rate
- Consolidating into one loan offers the benefit of one payment
- There is a planned end to the debt. Vehicle loans have fixed terms but credit cards are revolving and can go on indefinitely
- You get a new or newer car out of it!
- Frees up revolving credit for when you really need it - like an emergency
- Regular payments and paying down debt will help increase your credit score
