Not having a credit history means you are a risk – not a responsible adult living within your means. However, using credit wisely is often a skill learnt hard and fast when payments start climbing incurring interest or over the limit and late payment charges. Perhaps our advice on how to manage your two of your biggest debts, your credit card, and your car loan can save you from stress.
Managing Your Card Loans
The worst thing about credit card loans is that they come at an exorbitant interest rate, and if you don’t take timely measures, they can pile on quickly. You can try a number of ways to manage your credit card debt, but the most important one is to make regular payments. Making at least the minimum payment before your due date will keep the interest rate in check. Using an auto-pay option works well when you can lower the amount of interest further by making additional payments over the minimum each month. Planning ahead is key here.
Another good option is to take out another credit card with a 0% interest, which usually holds for a pre-set introductory period. This can give you a small window of time to repay your debt without incurring any extra in interest. But, you may want to take out a 0% credit card only if you’re sure you can repay the balance within the introductory period because after that the interest rate will shoot to a higher standard rate.
Managing Your Car Loan
It is natural to feel excited when you decide to buy your first set of wheels, but you need to plan and be sure you’re able to repay your car loan over a substantial period of time. Many people find themselves stuck making regular payments for the cost of a new car when the value of the vehicle may have depreciated considerably. Still, to keep things under control, push yourself to make additional repayments. Failure to pay will result in losing the car.
While taking the loan, it is important to check whatever restrictions your lender has imposed. Sometimes, they have limits on lump-sum payments or even additional payments making it impossible to pay off the car loan faster than the agreed term, which is true for most fix-rate car loans. Some lenders also have early termination fees to make sure they recoup the interest they would have lost by you repaying early. Check those restrictions before you decide to make additional payments for a faster pay off.
Consider opting out of many “extras” included in your car loans. Many of these “add-ons” are voluntary, so it is possible to say no to them and help lower overall fees and charges. Remember, some lenders lure you into making a decision by offering a lower interest rate, but they get their profit by selling you extras that incur additional fees. Think of refinancing your car loan if it costs you too much. This might help you save on interest and additional fees. New lenders may also help by offering some flexibility with repayments. It is a good idea to shop around at the time of taking a car loan. Reputable sites like Money Expert can lend a helping hand if you choose to take a loan online.