Auto loan consolidation is important to many consumers. If your car loans have high interest rates, a consolidation fixed rate with a low APR is a good idea. You want to avoid an upside-down loan situation. The face amount of an upside-down car loan is greater than the value of the car. A situation one does not want to find themselves in. Read on for an auto loan consolidation blueprint that really works.
Auto Loan Consolidation Step-by-step Guide
1) First, obtain a copy of your credit report from a credit reporting agency. Equifax offers a credit report with a score power package option, which comes with the FICO or Beacon score built-in. Contact the credit reporting agency in writing. Look for any errors in your credit report. If your FICO score is lower than 600, do not even bother to apply for an auto loan consolidation. Activate your Plan B which is outlined below.
2) Your Plan B’s goal is to consolidate without a bank, while simultaneously repairing your credit record. Use a non-profit credit counseling service such as the iDebtAssistance.net‘s Reduced Interest Rate Program. They are not the only ones out there though. Non-profit credit counseling services already have stand-by agreements with creditors. The one that you select will contact your creditors expeditiously, and eliminate or slash your interest rates and late fees, and consolidate all your payments into one monthly bill. You should start sending one payment each month to the credit counseling service, which will in turn pay your loan. This should get you out of debt within 48 months.
3) If your credit score is higher than 600, and you decide to use a financial institution for your auto loan consolidation, try several lenders, including your credit union, and some reputable online auto loan consolidation services because their operating costs are lower than those of regular banks. This could mean a lower APR. A credit union is, however, more likely to offer you a much better APR. Make sure that your new settlement rate is fixed, and the APR is extremely low.
Maintaining a Good Credit Rating after Your Auto Loan Consolidation
Transfer all your remaining debt balances to the one credit card with the lowest interest rate, and cancel the rest of your credit cards. Stick to a monthly budget. Pay your bills before the due date, and pay higher than the minimum amount due. Pay for your groceries and gasoline with your one credit card, and pay off the balance every month.
Avoid changing jobs and home addresses frequently. Doing so is a sign of instability. If your address is verifiable, stay in one place for about two years at least, and hold down the same job for at least six months, you will come across as a much more responsible member of the community. Rent or buy only a place or a car which you can afford. Enjoy your auto loan consolidation plan.