Home loan consolidation is quite common but not as many people are familiar with auto loan consolidation. However, auto loan consolidation makes sense since your vehicles are assets in just the same way as your property. Auto loan consolidation is an auto loan solution that can lower your monthly loan payments by combining them all into one loan. In essence, you’re refinancing your auto loans which can be advantageous to those with bad credit.
You might also be able to leverage money from consolidating your loans if you have enough equity built up in your vehicles, and you’ll have fewer bills to worry about.
By combining your different auto loans into one, you’ll end up with a lower monthly payment. This offers great advantages to anyone with bad credit since you’ll improve your credit score by paying them off.
If you consolidate your auto loans, you might be able to obtain a lower interest rate. This is especially true if you have a bad credit auto loan where the interest rate is often very high.
This can make a big difference in the total amount you pay over the course of the loan, saving you hundreds and possibly thousands of dollars. A large number of companies specialize in debt consolidation for those with bad credit. Do your research before you sign, however, to be sure you’re getting a good deal.
Some companies will allow you to refinance an amount greater than the figure you owe on your cars. This lets you deal with other aspects of debt such as what you might owe on a credit card. When you’ve paid off one of your cars, you might well be allowed to add more debt into the refinancing.
The advantage to this is that you’ll probably pay a lower rate of interest on your debt and be able to use the money saved to pay off the debt faster.
There are both commercial and non-profit debt consolidation companies. Both contain experts who can shape a program that’s right for you. It’s worth taking the time to have a counseling session before applying for an auto loan consolidation loan.
With so many companies and banks offering debt consolidation, you can always shop around for the best interest rates. This is important since the savings can be quite significant over the course of paying off a consolidated auto loan.
There’s a variance in interest rates even for those with bad credit, so take the time to research thoroughly before making an application. An hour or two spent checking figures will pay off in the long run.
If you’ve already paid off a large amount of your loan when you apply for an auto consolidation loan, you’ll have plenty of equity in your vehicle that can be released when you refinance.
You can use this money to pay off more of your debts which can erase your bad credit status sooner. Apply it to the bills where you’re paying the most interest as this is where it will have the most effect. Don’t be tempted to spend the money on other items.