A car loan and student loans can overload your budget fast. Take a look at a couple of ways to ease some of the pain.
1. Still a Student? Consolidate
If you are still a student, consider combining your debts into one. You might want to consider your student loans in this role. Student loans offer typically low rates, but sometimes other loans have better terms. You may have some hardship benefits - deferral, lower payments when you do not have as much, for example. Those benefits really helped me when I was between jobs or had other hard times.
A automobile loan, on the other hand typically doesn’t offer this kind of flexibility, and if you are paying on a car a few years old, it may not have the value to support consolidation.
I wouldn’t advocate a credit card as a way to consolidate. Credit cards, even the ideal, have steep fees when you’re late, typically higher interest, and too often offer you the opportunity to add to your debt - a bad idea when things are tight already.
If you choose to consolidate using student loans, you’ll have more loans to pay later. Do not go overboard. If you owe a ton on a nice Lexus, sell it. Keep you costs low and you will have less to pay later.
Not a Student? Try a Different Consolidation Loan
You can consolidate a automobile loan and student loans other ways as well. First, you could get a regular student consolidation loan to combine your student loans. This helped me reduce my payment significantly. You won’t be able to include the automobile, but it still may help.
A swift note on a straight consolidation loan from a bank or credit union. You can just apply for a consolidation loan, lump your loans together and make one payment. The problem is you may not be able to get a superior payment. If you apply for one of these, look at the payment before you sign and compare it to the payment you’re making on the loans separately. Add up your payments to see if it will help.
You should also think about the interest rate. You’ll probably not have a great rate, since consolidation loans don’t usually have any collateral. If it doesn’t help your budget and charges you more interest, it probably is not a good idea.
2. Improve Your Budget By Improving Your Vehicle Loan
Notice I didn’t say improve your automobile. Here are a couple of ways to make your budget work superior by changing your car loan.
- First, think about selling your car. If you can sell your automobile and eliminate an expensive loan, that might really help. If you bought too much automobile, this may save you. Be sure you know how you will get around if you get rid of the vehicle. Some campuses are setup so you do not really need one except for weekend trips, and you can borrow one from a friend or get them to drive.
- Second, and I’ve done this, consider refinancing your automobile. I had a normal car loan then found out a new bank would give me a great rate on refinancing my automobile. I took it, lowered my interest and have used that bank ever since.
Keep Your Debt Under Control
Whatever you decide to do, plan on getting out of debt. Making payments will drain your budget for years to come. Try looking into student loan forgiveness plans as well. Do not let debt slow you down. Live cheap for a while while you pay that debt off and build up some savings. It seems tough, but you can do it.
Once you have that ball rolling, pay cash for your car and keep saving. Put the money away to grow, and you will be able to retire early. Sweet! Nice move, genius!
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