Rebecca asked:
To provide a little more information, my mother in law will be taking it over via a personal line of credit because the loan is taken out against her vehicle (we actually used the money to pay off some other debt). The balance is just under $10k and we still have another 32 months on the original 5 year term. So even though we’ll technically still owe her the money, as far as our credit report goes it will be an auto loan we paid off. We have 2-3 credit cards each (we’re married but not joint on any of the accounts) that are nearly maxed with really high interest. I’m wondering if getting the auto loan paid off will enable us to qualify for a lower interest high balance card where we could transfer these balances and pay the debt off in a reasonable amount of time. Any info is greatly appreciated!!!
Tracy
To provide a little more information, my mother in law will be taking it over via a personal line of credit because the loan is taken out against her vehicle (we actually used the money to pay off some other debt). The balance is just under $10k and we still have another 32 months on the original 5 year term. So even though we’ll technically still owe her the money, as far as our credit report goes it will be an auto loan we paid off. We have 2-3 credit cards each (we’re married but not joint on any of the accounts) that are nearly maxed with really high interest. I’m wondering if getting the auto loan paid off will enable us to qualify for a lower interest high balance card where we could transfer these balances and pay the debt off in a reasonable amount of time. Any info is greatly appreciated!!!
Tracy
#1 by Zeltar on October 23, 2010 - 6:28 pm
Darryl
It will help a little, but not much. What it will do is cut your monthly recurring debt. This would help if you were applying for another loan. What would help your credit report, much more significantly, is paying down the high credit card balances.
#2 by odone on October 24, 2010 - 12:33 am
Corey
yes everytime you pay an account down to zero, it improves your credit.
As far as the credit cards, know that if you spent more than 30% of the total limit, your score gets affected negatively, so if you can pay down all your cards to 30% to help improve your credit.
Another option would be to contact the credit card companies and see if they would lower your rate.
#3 by ibu guru on October 24, 2010 - 2:37 pm
Lester
It’s those high balances on the credit cards that are killing your credit. “Paying off” the car loan has very minor impacts in comparison to the heavy-duty damage your high credit card balances are doing to you. You are not likely to get any reduction in your credit card interest rates until you pay off (or at least dramatically pay down) all of your credit cards.
Banks are so desperate for money these days, they are sorely disinclined to reduce interest rates. Plus interest rates are already rising on Treasuries. Interest rates in general are headed upward before the end of this year. Highly unlikely you will be able to negotiate a lower interest rate.
#4 by bobby769 on October 27, 2010 - 3:50 pm
Joyce
It’ll help your credit report a little bit but as it was already said, paying off your credit cards would be the better road to take.
IMO you’re taking a couple of somewhat hefty risks:
– bringing in-laws into your finances.
– taking out another credit line to consolidate.
Have you called your creditors to ask for a lower rate?
Don’t take no for an answer. If the first person says they can’t help you, ask to speak w/ their supervisor. If that person says no, ask to speak w/ credit review.
People often hear that it’s best to pay off the cards w/ the highest interest, and that’s true but something a little more specific that makes a bigger difference when you first start debt elimination is
to pay down the card that has the most being charged in finances.
Every month you pay finance charges is money being thrown out the window. So by reducing finance charges, you’re working on first stopping the bleeding.
There’s only one way for you to find out if you can pull off a lower rate.