Can You Consolidate Car Loans?
Keeping up with car payments can be a challenge if you have taken out multiple loans. Having several monthly payments at different interest rates that you can’t keep up with can damage your credit score.
But by consolidating your car loans, you can get yourself out of this exhausting and expensive cycle.
Car loan consolidation is a simple way to reduce interest payments, improve your credit score, and simplify repayment. Read the following article for a guide on consolidating car loans.
What is Loan Consolidation?
Loan consolidation is a financial strategy that involves taking out a single large loan to pay off multiple smaller loans. This can be done for a variety of debts, including car loans, student loans, and credit card debt. By consolidating your loans, you are forfeiting the privileges and terms of the initial loan and agreeing to the terms of the new loan.
Can You Consolidate Car Loans?
Car loans are an ideal type of debt to consolidate. Individuals, and families in particular, often have multiple vehicles and car loans. Consolidating allows you to lump all of these loans together into a single loan.
How to Tell if You Need to Consolidate Your Car Loans
Consolidating your car loans can confer numerous benefits, but it isn’t for everyone. If you don’t have multiple car loans, or if you have low interest rates on your outstanding debt, you may not need to consolidate. However, if the signs listed below apply to your loans, consolidating can help you pay off your debts quicker and more efficiently.
You Have Too Many Monthly Payments
Perhaps the biggest problem that comes with taking out multiple car loans is making several monthly payments. This is both stressful and inefficient and raises the risk of missing payments. If you start missing payments regularly and falling behind, even on one of your loans, your credit score will be damaged.
Your Interest Rates are Not Favorable
Multiple loans mean multiple interest rates, which increases the chances of having an unfavorable interest rate on at least one loan. An excessively high interest rate on just one loan can cost hundreds or thousands of extra dollars in interest payments over the course of the loan.
How to Consolidate Your Car Loans with Stilt
Stilt is an online lender based in San Francisco, California, that aims their lending services at immigrant and noncitizen communities. While most lenders focus entirely on credit history, something that most immigrants do not have in the United States, Stilt shapes its eligibility criteria to include immigrants. Consolidating your loans with Stilt is a simple process that lets you start saving on interest payments immediately.
First, fill out a loan application. In this application, you will detail the reason that you need the loan, along with important personal and financial information. You will also authorize a soft credit-pull. Completing this application takes only a couple of minutes.
Stilt will respond to your application with a decision within 24 hours. If you meet the eligibility requirements, your application will be accepted. Stilt will then detail the interest rate and repayment schedule that you qualify for. If the terms are agreeable, then you just sign a promissory note agreeing to the terms of the loan.
Upon submitting the promissory note, Stilt will pay off your outstanding debt. Then, you start making payments on your new loan, in accordance with the repayment schedule that you agreed to.
4 Benefits of Auto Loan Consolidation
Auto loan consolidation can save you money, time, and stress. See the following list for a few specific examples of the benefits you will attain from consolidating your auto loans.
1. One Monthly Payment
If you have multiple auto loans, you likely have to make multiple monthly payments on your loans. This can cause a lot of confusion and stress, and also makes it more challenging to stay up-to-date on your payments.
When you consolidate your loans into a single loan, you will only have one monthly payment. One monthly payment is easier to remember and makes keeping track of your debt much simpler.
2. Lower Interest Rate
Many borrowers get a lower interest rate upon consolidating their auto loans. If your credit score or income has improved since you took out your initial loans, your new lender will consider the improvements and offer a better rate.
Also, each lender has their own eligibility requirements and range of interest rates that they offer. So, even if your finances haven’t changed substantially, you may get a lower interest rate with a new lender anyway.
3. Improved Credit Score
When lenders assess the finances of a borrower, one of the factors that they consider is the number of lines of outstanding debt. Having numerous lines of outstanding debt can damage your credit score, especially if you start falling behind with payments. With a single, consolidated loan, you will only have one line of debt, and you can more easily stay on top of your payments.
4. Reduced Stress
The stress of tracking multiple lines of debt and making several monthly payments can be a huge burden. If you have fallen behind on any of your debts, you may even be receiving collection calls. By consolidating your auto loans you will simplify the entire repayment process, pay less overall, and make only one monthly payment. Consolidating also pays off your initial debts in their entirety, so you will no longer receive collection calls.
There are few people with multiple auto loans who wouldn’t benefit from simplifying their repayment schedule and obtaining a better interest rate. With consolidation, you can save big in overall interest payments, and make your life easier in the meantime. Immigrants and noncitizens who fear that they would be denied a loan by the big banks can turn to lenders like Stilt.