Can you consolidate car loans? This guide walks you through the process of consolidating car loans with your credit card. See how much your monthly savings would be with one consolidated debt.
What is an auto loan?
Car loans are one of the most common types of debt and a lot of people fail to realize that it can be very difficult to consolidate car loans. If you have credit cards, you can consolidate them with your car loan, but if you don’t, then you’re in trouble.
While there are lots of good reasons why to consolidate car loans, the process is not always easy. This guide will walk through the process and give tips on how to do it yourself as well as cover some common pitfalls to avoid.
Eligibility
Eligibility for both credit card and car loan consolidation varies depending on the type of debt and your credit score.
The following table summarizes which types of debt qualify for credit card and car loan consolidation:
Credit Card Debt Eligibility
Unsecured Debt (also known as Payday Loans) - Unsecured debt such as credit cards, loans, payday loans
Secured Debt (also called MasterCard debts) - Credit cards, other secured debts, auto loans
Student Loan Debt Eligibility
Before applying for a consolidating loan or credit card, you need to know whether you qualify. The following table outlines which types of student loans qualify as eligible:
Student Loan Debt Eligibility
Personal Loans - Loans that are not secured by a home or car; also include college loans, personal loans purchased with educational funds. Parental Loans - Parental mortgages or student loans that are paid off before the age of 23; also includes cosigner loans. Equity Offset Mortgage - Loan where the borrower purchases equity in their home through a second mortgage; this typically involves a down payment from the traditional mortgage application process. Personal Lines of Credit - Are made available to consumers to cover short-term financial needs such as emergencies or unexpected expenses; these typically have an interest rate of between 0% and 5% APR. In some cases these are offered at variable rates. Mortgages can be repaid with regular monthly payments over the length of repayment; this allows for maximum flexibility with regards to financing costs. Business Lines of Credit (BLCs) - Are lines of credit that can be used by companies to meet their individual business needs, such as short-term financing for product development projects and smaller purchases like office supplies or food items; they typically have an average interest rate charged at 0% APR per month. They may also have variable rates depending on the lender’s business model and default risk factors such as default rate percentage compared to its peers and market factors affecting interest rates relative to its peers’ average interest rates on similar types of borrowing options. Regulation A+ Lenders – These are lines of credit extended by state-licensed banks and trust companies in order to allow them more flexibility in managing their business operations; these lenders may offer variable rates but usually charge some form of lock in period between each payment at a minimum rate that is generally higher than 0%. For example, they may require borrowers at least lock in 6 months at 2%, while borrowers who pay monthly
Steps to Consolidate Car Loans
If you have a car loan and credit card debt, these two debts can be consolidated.
Another of the most popular but also one of the least known questions on Quora is “Can you consolidate car loans?”
A related question that has been asked a lot on Quora is “What is the best way to consolidate credit card debt?”
The answer to both questions focuses on improving your overall financial situation. Consolidating debts like car loans and credit cards can be helpful because it allows you to use your cash flow more efficiently. But beyond improving your finances, there are some tangible benefits you will see when consolidating debts. For example, if you have multiple credit cards that are all maxed out, it may be possible to open up one account with a low limit by consolidating them together. These tips may help you get started with consolidating debt as well.
The following tips are general suggestions and should be applied only as a last resort, similar to how an emergency room doctor would recommend an IV without giving it a second thought: don't pay off credit cards in full every month; don't make any long-term purchases or use high-interest rate cards; avoid paying for things over 6 months; pay off your balance in full every month or every three months if possible; and avoid paying for things if it's going to take more than 6 months.
How to Get Lowest Interest Rates
Lots of people are trying to get the lowest possible interest rates on their car loans. And, to be fair, there is a lot of information available. If you want to know more, check out this awesome post by our friend David Laupus at HowStuffWorks (he has a pretty comprehensive list). One thing I wanted to highlight was that there are three kinds of lenders:
- Credit card companies (which will never charge you an origination fee, but they will charge you interest on your balances)
- Car leasing companies (which will charge you origination fees and origination charges)
- Bank loan companies (which are going to charge you interest rates based on how much money they get from your loan).
The problem with credit cards is that they work almost like an extension of the bank system: when you use the card for shopping or making a purchase at a store, for instance, your bank account is debited for the amount used. That’s great if you are using the card to make a large purchase from somewhere like Amazon or Walmart and the merchant offers cash back — but not so great if your main purpose is using it as a payment method at restaurants or retail establishments where prices can vary widely from one day to another (say in NYC vs San Francisco). It also means most credit card users don’t have enough cash in their accounts to pay for an entire month’s bill each month; so they end up paying high fees which simply add up over time until they eventually have their balance completely wiped out.
Credit cards also often come with stiff penalties if they don’t go through smoothly and become delinquent — which means if things go wrong during processing, say due to error or fraud, then all those hard-earned dollars are gone and aren’t getting replaced by lower interest rates. These types of fees can really hurt your savings goals because even though your credit limit increases after every payment goes through smoothly — unlike banks — these types of fees can quickly add up over time making it harder and harder to keep track of where your money is going.
So here’s what I recommend: 1) Get multiple credit cards 2) Keep them separate 3) Pay off one each month 4) Don’t use them all at once 5) Make sure you keep track of when payments are due on all 3 cards 6) Pay off one in full each month 7) Use this as an opportunity
What are the Best Options for Consolidating Car Loans?
This guide walks you through the process of consolidating car loans with your credit card. See how much your monthly savings would be with one consolidated debt. The main ways to consolidate auto loans include adding a new credit card, using a third-party consolidation service or checking out the free options available on the Internet.
Conclusion
This is a great question. As a general rule, the answer is quite obvious: you can’t consolidate car loans and credit cards into one simple consolidated debt.
While it seems obvious that you can do this and save a ton of money, the reality is that it’s not that simple. There are several factors to consider when consolidating debts together:
1) The interest rate of the car loan(s) and credit card(s) will be different from the interest rate on your savings and credit card(s).
2) Your credit card(s) might have a lower limit than your savings (or vice versa).
3) You might want to put some of your savings on one card or loan while leaving all others on another (which will often save you additional interest).
4) You might want to put some of your savings on one card or loan while leaving all others on another (which will often save you additional interest).
5) If you are using an online bank, there may be fees to borrow money from them while also borrowing money from your traditional banks. This can add up if you have several credit cards or loans.