Americans are perpetually in debt and they are often experiencing financial issues because of overpowering and ever-mounting debts. As per the findings of a recent survey, the 25-to-34-year-olds on an average are known to carry $42,000 in terms of debt but that is minus the mortgages. As per https://www.forbes.com, thanks to this heavy financial burden, numerous adults in the United States are delaying important life milestones and postponing events such as getting married, buying houses, and even starting families. The vicious cycle of debts and more debts seems to carry on ceaselessly. Here are some smart strategies formulated by financial experts to help young Americans in eliminating their auto debts and other debts much faster and enjoy a debt-free existence.
Auto debts are regarded usually as unproductive or bad debts since vehicles tend to lose their value once they are purchased and they do not belong to what we refer to as the ‘investment class or category of your assets’. As per automobile specialists, a new vehicle would be losing 20 percent of its actual value, as soon as it is driven out of the car dealership. Even though you are compelled by circumstances to take an auto loan for purchasing your next car, it would not get added to your present debt woes provided you could pay it off consistently and quickly and you must focus on making the payments well ahead of the agreed schedule. You could easily help in the reduction of interest amount and boosting your overall credit score. Here are some effective tactics for getting rid of the auto debt faster.
Think in Terms of Making Bi-Weekly Payments
You must ensure that you are submitting half the payments every couple of weeks rather than putting in regular monthly repayments. This should help in accomplishing three important things:
- Less interest would be accumulating due to the fact that your payments would be applied more frequently.
- You would end up making an extra payment as we already know that there happen to be 52 weeks in one year that implies 26 annual payments.
- If you carry on doing this throughout the loan term, you could successfully shave off a number of months.
You could start making bi-monthly payments provided you had a prior discussion with your lenders. Many lenders would slap penalty fees if you pay off your debt before the scheduled date.
Consider Rounding Up the Payments
When you focus on rounding up your payments, it is an easy and simple way of paying a little extra without missing the funds at all. Just like the bi-monthly payments, in this case, you are not required to come up with huge additional funds for knocking off some months from your loan term. For example, suppose your auto debt payment is $264.12 and you decide to round up the figures and pay $300 instead that is an additional $35.88 every month. So, after 12 months, you have ended up paying $430.56 extra which is equivalent to nearly two extra payments. You could pay $50 or even $100 more every month and accumulate a significant amount in terms of additional payments that should culminate in money savings in terms of interest and even shortening of the previous loan term.
Look for Alternative Sources of Income
You could look for a part-time job like babysitting just a single day a week, freelance content writing, etc. you could organize some additional funds for paying off the auto debts or some other debts faster than the stipulated period.
Consider Consolidating Your Multiple Debts
You could consolidate your multiple debts including your auto debts and take out a single debt with just one single monthly payment and probably a relatively lower rate of interest. By consolidating all your debts into a single but effective debt consolidation loan, you could enjoy many striking advantages. You could enjoy a relatively lower rate of interest and a more convenient way of paying.
When you are bogged down by multiple debts, you would be grappling with a number of overpowering debts that might make debt management a really painful affair. With an effective debt consolidation loan, you simply need to make a single payment. The most vital factor, however, is the APR. Stop paying a relatively higher interest rate just for the sake of consolidation. You may seek reliable services of any reputed organization such as NationaldebtRelief.com that is a top-rated debt consolidation organization.
Make Just a Single Additional Payment
You could get rid of your auto debts effectively by making an additional payment every year. You must consider using money from a bonus or tax refund for assisting you in paying down your loan quickly and effectively.
Refinance Your Loan
This is certainly one of the most effective and easy ways of lowering your payment, saving your interest, and paying off your debt in almost half the stipulated time. Several credit unions and local banks generally offer a very low rate of interest in car loans and mortgage loans. You could refinance your loan for super-low interest rates and reap the benefits.
Enjoy the Benefit of Going Paperless
Sometimes you could enjoy additional discounts if you opt for paperless statements and auto payments. It would save money, as far as the lender is concerned as he would not have to get involved in paper billing. Moreover, this helps in creating a seamless and effective payment experience.
You could surely get out of your debt trap but you need to be serious and sincere about remaining out of debt. You must pay off all your auto debts and other credit card debts and get rid of the plastic. Pay off all your auto debts and keep on driving your present car instead of running around and taking the pains of financing another one. You may be able to write a check yourself for your next new car provided the car payments were diverted directly to your savings account for just one year or a couple of years. You need to quickly get out of the debt trap. Start living on what you are making. You would no longer need to bother about your credit score again.