How To Buy A Car On Finance While Repaying Your Debt

A recent report by the New York Times showed that 44 percent of car buyers used finance to purchase their vehicles in 2019. Of that population,The Federal Reserve Bank Of New York estimates 7 million of them are three months behind on their car repayments. This is not surprising since eight in 10 consumers are currently in debt and looking for a way out – or simply a way to keep up. A car has always been a sizeable investment for any consumer; it takes up around 13.5 percent of your gross annual salary. With car loans surpassing $31,000 and rising car finance prices, buying a new car is beginning to seem out of reach for many, especially those that trying to get rid of their debt. Yet you may find yourself in a place where a new car becomes a need. In fact, 85 percent of Americans rely on their cars to get to work. If this happens, it is possible to do both successfully with a little planning and the use of clever tactics to minimize the impact of adding car finance to your debt.

Go Second Hand

One great way to reduce the financing charges of buying a new car is, of course, to reduce the purchase price. Second-hand cars cost a fraction of a new car’s price, and therefore come with lower finance payments if you purchase one on credit. In May 2019, the average cost of a new car rose to $36,718. With average interest rates at 6 percent, consumers end up paying $2,203 in interest annually. However, a used car can cost around $20,000, according to estimates from Kelly Blue Brooke, which halves your interest charges and overall monthly repayments. The reliability of the car model you do choose will play a large part in minimizing the financial impact – less reliable used car models would require more repairs and upkeep. Expert and driver ratings and reviews both have a role to play in informing you about a vehicle, and incorporating these into your decision will help you pinpoint cars with high-reliability ratings and the best resale value.

Maximize Promotional Credit Card Balance Offers

Typically, financing a car purchase using a credit card is not advised since they come with notoriously high-interest rates. However, there are also ample credit card offers out there, including 0 percent APR or on balance transfers. The key to this is being able to calculate and repay the amount before high-interest kicks in. Alternatively, you can use a credit card to pay just a part of the price and enjoy the benefit of credit card protection.

Another nifty financing option is to check out your local credit union or alternative financing institution. A little research and the use of loan comparison websites like BankRate.com and ELoan.com can help you identify interest rates in your local area and great car finance offers, like Bank of America’s interest rate discounts for current customers (2.99 APR for new car purchases or 3.49 percent APR for used car financing). Credit unions like the NASA Federal Credit Union and Connex Credit Union also match these rates with a loan term of up to 84 months.

Splurge on Your Debt Repayment And Capitalize on A Better Auto Loan

When it comes to paying a downpayment on your car or putting it towards paying down your loan, it makes sense from an interest rate point of view to pay down your debt. As you repay your debt, your debt to income ratio and credit score increases, as does your FICO Auto Score – key factors that affect your auto loan interest rate, loan term and acceptance.Building a better credit profile may also increase your chances of securing promotional offers from your dealer, such as 0 percent APR for a limited time. This essentially reduces the financing and overall cost of a new car, making it more tolerable to add to your current debt levels.

Keeping up with your debt repayments can be a precarious process for many. Add in a sizeable new purchase like the cost of a new car, and it can easily go awry. However, you can do both if you need to and still stay on track with your debt. It all comes down to having the right information and making the right financing choices. With this article, you’re halfway there.

Chrissy Helders

Post to Twitter

Why Taking Responsibility Could Be An Important Start To Addressing Your Debt

A majority of Americans are carrying some form of debt; approximately 77 percent of them according to Northwestern Mutual’s 2018 Planning & Progress study.The average debt per person has surpassed $37,000 in the last year and more people are finding it difficult to face their increasing debt. While having there are a host of debt management tools and apps available to help you on your journey, the key to resolving it begins with taking responsibility both for your past spending habits, and your future. If one is to become debt free, it takes a good amount of sacrifices, cost-cutting, and self-reflection. The sooner you accept responsibility, the earlier you can begin to make progress in your debt journey. Here are a few ways you can face your debt problems; and why it works.

Change The Narrative

The first step in conquering your outstanding bills is to change the way you view it. Debt can impact much more than your financial health; debt can affect your mental well being as well. Therefore, changing the way you approach it is important for many more reasons than simply being free of repayments or rebuilding a credit score. While it is a financial obligation and can be a source of financial stress, focusing on the end result can be much more motivating than looking at the current problems it presents. So instead of focusing on how little disposable income you currently have thanks to debt repayments, try considering what you would like to do with the cash once it is no longer pledged to repaying debt. Changing your view also means embracing responsibilities for repaying your debt.Being accountable allows you to better yourself and the decisions you make when it comes to your finances; allowing you to truly move forward and become debt free (and remain that way).

Get Comfortable With Your Means

Often, the reason that many of us end up in debt is that we purchase or spend on items that are not within our current means or income bracket. As a result, we end up using credit cards or other financing options and having high-interest charges compounds it further. Instead, get comfortable with your income without any reliance on savings, credit cards or other financing sources. Can you afford your current lifestyle on your monthly income? If not, this is a sign to examine the different aspects of your spending and get to budgeting. It can also pinpoint the problematic areas for you when it comes to debt. Knowing your triggers is a vital part of the battle against debt.

Take The Emotion Out Of It When Dealing With Money

Money worries are the number one trigger when it comes to stress in America. Being emotionally invested when making financial decisions can cloud or influence our judgment. As a result, you may end up choosing not the best option financially. One good example is cutting costs to put extra money towards repaying your debt. Often we may be hesitant to reduce money spent on items or activities simply because it has a meaning to us but it is not necessarily a need in our daily lives. Taking the emotion out of it means being objective and a great way to do this is writing everything down on paper. Focus on the numbers and your debt plan; this will help you stick to your resolve.

Chrissy Helders

Post to Twitter

6 Steps to Ditching Your Debt

Let’s face it — debt sucks! Keeping up with the payments means less cash to do what you really want. And, the interest makes the burden grow, often faster than your payments reduce the balance due. With a solid plan and a lot of determination, you can ditch your debt and get back to having more fun.

Not sure where to start? Here are Charlie’s 6 steps to ditching your debt:

Stop the Bleeding

Unless it’s completely unavoidable (like that student loan for next semester), don’t take on any more debt. Avoid new credit cards, lock up/cut up the ones that you have, and consider freezing your credit. It’s important to take control.

Assess the Damage

Now, it’s time to see what you’re up against. Make a list of all of your debts to include who you owe, how much you owe, the minimum monthly payment, and the interest rate. Then, brace yourself and determine the grand total.  (It’s OK to have a glass of wine, a chocolate cake, or a bubble bath after this step!)

Choose Your Strategy

There are two main ways to tackle debt: the snowball method or the avalanche method. With the snowball method, you pay your debts off from smallest to largest amount owed. This is great for momentum building — you’ll feel like you’re #winning pretty quickly. With the avalanche method, you pay off your debts from highest to lowest interest rate. Ultimately, the math works out in your favor here because you’ll pay less in interest overall. If you’re paying off debt, ignore any haters, because it’s a victory regardless of how you do it!

Tighten Your Purse Strings

Trimming your budget may be painful at first, but crushing your debt will feel amazing. There are some easy places to cut spending first: eating out, shopping, travel, entertainment, etc. If there are things you can’t cut completely, find hacks to spend less. Use gift cards, skip the expensive cocktail at dinner, or shop thrift stores. If you can’t cut these categories any further, consider going more extreme. Get a roommate, sell your car, or move back home. These strategies are hard, and may not be possible for you (or you’re already doing them!), but every dollar helps.

Hustle for Extra Cash

In addition to cutting your spending, try earning some extra money specifically to go toward your debt. Look for side gigs, sell your stuff, or offer freelance services.

Track Your Progress

Ditching your debt is hard work. It takes commitment and willpower. This process could take a long time, so it’s important to track how far you’ve come to keep your motivation level high. Be sure to reward yourself (in a budget-friendly way!) as each account balance hits zero.

Remember: You’re not in this alone. Charlie can help. Just tell him ‘pay off debt’ and he’ll guide you.

Share with Charlie: What’s your favorite debt pay off story? Do you have any tips for the community?

This article was originally published at HiCharlie.com

 

Post to Twitter