If you pay down credit card balances, it brings 2 main benefits when planning for an auto loan. One, it frees up more money to put towards your down payment and two, it reduces your credit utilization ratio.
We asked our Ayr auto loans team to come up with 4 practical ways to help you pay down credit card balances to help with both those things.
Credit cards and Ayr auto loans
There are a few ways to help pay down credit card balances. They won’t all be easy and they won’t all be possible for everyone, but they are possible.
The easiest way to accelerate paying off credit cards is to switch balances to 0% credit cards.
- Apply for a balance transfer card or 0% card.
- Transfer all your credit card balanced to that card.
- Prioritize paying off that card as quickly as possible.
- Apply for another balance transfer or 0% card before the period ends on your first card.
- Switch balances to your new card.
- Rinse and repeat.
This process works as long as you can transfer all or the vast majority of your credit card balances to the transfer card and you pay as much off the card as possible during the 0% period.
Lock the cards away
Locking your credit cards away won’t necessarily help you pay them faster but it will stop you using them to increase those balances. If you combine the two, pay more each month while locking the cards away, you should get out of debt much faster.
Lock them in your safe, give them to someone you trust or cut them up. Whatever you do, make sure you cannot use them.
Work overtime or get a side gig
Depending on your circumstances, working overtime or working a side gig can provide the extra funds you need to get on top of credit cards.
If you have the opportunity to work overtime in your day job, take it. Use everything you earn to pay down those credit cards. This will not only help you get out of debt but also provide the motivation to work all those extra hours.
The same for a side gig. Drive for Uber, deliver fast food, teach online, work as a freelancer or something else entirely. Use everything you earn to pay down those cards.
Roll credit card debt into your auto loan
If your credit score is high enough, you could use an auto loan as a consolidation loan to pay off credit card balances as well as buy the car. As long as you can borrow enough to cover everything and already have the down payment, this could work.
We would recommend using this method alongside behavioural changes to curb credit card spending so you don’t make history repeat itself but this is an effective method of managing debt.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!