7 Ways To Lower Your Interest Rates & Get Out Of DEBT

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1) Transfer Your Debt To The Lowest Interest Rate(1 of 7)

Transfer Your Debt To The Lowest Interest Rate

1) Transfer Your Debt To The Lowest Interest Rate(1 of 7)

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Example: Car Loan vs Credit Card Payments: If you own a car and have equity in your car (40% or more) but have a credit card (s) that you can’t pay off; refinance your car, and pay off your credit card. Car loans typically have a much lower interest rate and can be paid off over a longer period of time. This will reduce your monthly expenses; lower your interest rate, while giving you the flexibility to pay larger amounts of your car loan when you have the money. After you have your credit cards paid off, make sure you do NOT carry them on a day-to-day basis and accrue the debt again.

Additional Examples: If you have 10,000 of debt on both a credit card and a car loan, here is what the typical interest rates would be:

Car Loan = 4% = $400 dollar per year in interest charges on a $10,000 loan
Credit Card = 16% -= $1,600 per year in interest charges on a $10,000 Loan.
Savings = $100 Interest Payments per month

Very Important Note: At the beginning of your car loan, more of your car payment goes towards interest, while towards the end of your loan payment goes toward paying the interest on your loan.

Example of your interest rate on a 4 year auto loan (4% interest rate, $10,000 owed) = $1,600

Year 1 = $700 interest per year
Year 2 = $500 interest per year
Year 3 = $300 interest per year
Year 4 = $100 Interest per year

Total = $1,600

Example of paying off your credit card in 4 years (16% interest rate, $10,000 owed) = $6,400

Year 1 = $1,600 interest charge per year
Year 2 = $1,600 interest charge per year
Year 3 = $1,600 interest charge per year
Year 4 = $1,600 Interest charge per year

Total = $6,400

Summary: Make a detailed plan on how long it will take you to pay your debt, get the lowest interest rate possible, refinance your car, pay your credit card, and stick to your plan.

All of the above applies to a home loan as well.

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