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Credit Card Debt Reduction - 3 Tips To Lowering Credit Card Debt
Credit card debt can be reduced through lower rates or
negotiating for reduced balances. With reduced interest, you can
pay off the principal quicker with the same monthly payment. The
other approach is debt settlement, which eliminates part of...
Debt Consolidation Benefits
If you’ve ever been in a situation where you needed money that you didn’t have, you probably already know about loans and credit cards. Here is a brief Explanation on What both are: Loans A loan is a type of financial aid which must be repaid,...
Debt Settlement Strategies
One of the most common social diseases remains dormant for a long time. And when it raises its head, it reveals its monstrosity slowly. What is the social malady? Think. More than a million Americans are affected by it. Yes, I am talking of the ugly...
Reducing Debt Before It's Too Late ... How To Avoid The Pitfalls Of Creeping Debt
Reducing debt usually isn't a high priority for people until they have already gotten into trouble with overspending. Using a few basic guidelines, and debt calculations, can help you see when your debt load is getting into the danger zone.
...
Self Help When You're In Debt
It's no fun being in debt. Money shortages are always stressful and serious debt can emotionally drain you. And yet, while you'll find lots of advice about the practical aspects of debt management, there is precious little help available for the...
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Debt Consolidation – Be Careful When Trading in Your Car
The automobile has long been recognized as the classic American status symbol. America’s millions of miles of roads and overall lack of long-distance mass transit leave the automobile as the primary method of transportation for most Americans. Because so many people spend so much time in their cars, they often use them to make a personality statement. The car is an extension of the driver. Unfortunately, the debt incurred to pay a car is also often an extension of the driver’s own financial problems.
Recent statistics show that the average auto loan is issued for 101% of the purchase price. How can that be? It turns out that many Americans, in their desire to maintain status, usually trade their cars in for a new one while they still owe money on it. The high rate of depreciation on new cars means that consumers often owe more money on their auto loans than their cars are worth, and they make the situation worse by trading in that car on a new one while still owing money on the old one. They simply consolidate the balance of the old loan with the principal of the new loan.
Auto manufacturers hit us with a constant barrage of advertising for the latest and greatest models of cars, trucks and sport utility vehicles, along with their latest sales techniques of rebates, discounts and add-ons. Consumers often trade keep their cars only until the desire for another one comes along and then head out to the dealership to trade the old one in. This is usually done without any regard for how much money is owed on the existing vehicle, leading to the consolidation loan that adds the unpaid balance from the old loan to the new one.
It isn’t smart to owe more money on a car than it is worth. Cars are generally insured for the replacement value of the vehicle. If you purchase a car and roll $5000 of
debt from the previous vehicle into the new loan, you are now driving a car that is not only worth less than you owe, but is also insured for less than you owe. Should you find yourself in an accident, you’ll have a wrecked car and a heavy debt, which is not a good combination.
Here are some tips for avoiding this scenario:
Keep your loan term short. If you have to finance that BMW for eight years in order to keep the payments affordable, you should probably be shopping for a Dodge instead. Auto loans that exceed five years are generally unwise unless you’re sure that you’ll keep the car for at least that long.
Make a larger down payment when you buy. The less you borrow, the less you’ll owe several years down the road.
Keep your car until it has been paid off. This one is obvious, but few people actually do it. The least expensive way to own a car is to simply keep it until it won’t run anymore. If you keep the car longer than the loan period, put the amount of your payment aside each month to save as a down payment for the next one.
When you make a decision to purchase a car, consider the length of the loan carefully. Most cars lose more than half of their value in five years or less. Try to keep your loan duration as short as possible. An automobile is a valuable tool to own, but it shouldn’t own you.
About the Author
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to personal bankruptcy, debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity loans .
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