It can sometimes feel overwhelming when you’re trying to juggle debts – whether that’s just a mortgage and a car loan or extra credit cards and accounts. Consolidating your car loan with your mortgage could help to make the processes a little simpler and allow you to pay back what you owe each month with ease.
You should make sure you have all the information needed about your car loan and your mortgage – it’s useful to know the exact amount of money you owe on each, and when each loan is due to be paid back in full. Having the basic figures and amounts at your fingertips will help you to budget properly and make the most informed decisions.
Why should you consolidate your car loan with your mortgage?
Generally people consolidate their debts in order to reduce their repayments. This works by the consolidated debt resulting in lower interest rates overall.
It’s important to make sure you consolidate your debts in the right way though as you can easily end up paying more interest in the long run if you’re not careful. This often happens when people consolidate their car loans with their mortgage and it ends up having the opposite result to the one that they wanted.
Be aware of loan terms
You need to understand that car loans and mortgages have very different loan terms. Most people will mortgage their home for 30 or more years – giving themselves a long time to pay back what could be a huge sum of money.
Car loans are generally much shorter term – they are usually no more than 5 or 6 years with an extreme long-term car loan being just over 80 months. Although a car is a big purchase, the total costs are usually nowhere near that of a home.
People often make the mistake of consolidating these two loans and financing both over a 30-year term – meaning you could be paying on a car loan for decades after selling it!
What’s the best way to do things?
Always ask for help if you’re unsure of how best to consolidate your debts – there are companies out there with years of experience helping people to get themselves on track with easier payments and consolidated loans. It can save you time, money and a lot of stress to ask for help rather than attempting to do things yourself and then realising you may have made expensive mistakes when it’s too late to change them.
If you’re thinking about consolidating your car loan with your mortgage, it’s really important to figure out how long each has left on them. You may in fact be better off having a separate home loan but thinking about consolidating your car loan with any other outstanding debts such as credit card loans – these will have a much more similar term.
Consolidating debts can be a great way to reduce interest and therefore overall payments, but you need to choose the right debts to consolidate.
