Our Debt Free Family

Commit. Plan. Take action.

  • ABOUT
  • CONTACT
  • FREE FB GROUP
  • FREE DEBT REDUCTION TOOLS
  • GET OUT OF DEBT
  • Privacy Policy

Why You Should Look at Motor Finance Alternatives

January 21, 2020 | Leave a Comment

As a driver, there will come a time where you’ll be looking at changing your vehicle for a newer one. Whether that’s because your current vehicle has become a bottomless pit of repair and running costs, or you’re starting a family a need something bigger than your current model. Unless you have the savings to cover it, it’s more than likely you’ll be looking at financial help to make this purchase easier. But where to begin? It can be difficult knowing which is the best option for you with so many different types of finance available. Here are some pointers to help guide you and why the alternatives may be better.

Older Vehicles Provide Better Deals

With a new year means many great deals on vehicles available. It was reported that 27% of all vehicles sold in October 2019 where brand new 2020 models, meaning many more people went for slightly older plates. This is because of the large drop in prices seen on models between 1-3 years old, even if they have low mileage. You should be able to take advantage of the dealerships wanting to make room for newer cars by moving on their current older stock. Based on that statistic, many people seem to agree. But to truly make the best of reduced costs on a nearly new vehicle, you need to choose your finance options carefully.

Higher Purchase Agreements or a Direct Lender Loan?

It can be easy to find understanding the various details of higher purchase motor finance agreements a little confusing. After all, they come with many different terms that you need to stick to avoid any extra charges. For example, if you were looking to lease a car, this will come with various details such as limited mileage to stay within or condition when giving the car back. For this reason, you could end up agreeing to pay a monthly amount that could end up being much more. Opting to purchase a car outright has far been the cheapest option for many years, as you’ll only pay the value of the car. Easy if you have the savings available, so how can you still do this without having the available funds? Fortunately, there are various alternative motor finance options available that will help.

There are many lenders who are willing to provide low-interest car loans that will provide you with the interest charge upfront and combine it with a flexible repayment length for low monthly repayments. This way you can avoid the dealerships and pay them outright, leaving you to pay a manageable, low rate loan instead. This also means you’ll own the vehicle, meaning you can decide to sell or keep it for as long as you want.

Credit Card

This one will depend on how great a rate you can get on a credit card. Otherwise, you could end up paying a lot more in interest than with any other option available. Credit cards are great for flexible lending, only using when you need it. But if they are not managed well, they can rack up high-interest charges and can quickly create an expensive debt. If you’re thinking of using a credit card, it’s worth looking for 0% interest-free deals that will mean you can, for a period, pay no interest on the amount you spend. The trick is to remember to move the balance to another credit card before the 0% period finishes, with ideally the new credit card having the same promotion.
The great thing about this is you can continue to do this for as long as you have the debt to pay. The only stumbling block would be your credit rating, as you’ll need to maintain the monthly payments to ensure this doesn’t drop and you can’t get approved for another credit card. If done successfully, you could pay no interest at all on your vehicle amount, apart from a balance transfer fee each time you move the funds.

Peer to Peer

This one is much less used than a loan or higher purchase agreement but can work out to be a great money-saving option. Peer to peer lending involves borrowing from other people who are willing to lend to you. This means not borrowing from a bank or car dealer or other direct lender company. Instead, you would go into an agreement with someone just like you; your peers! Now what differs this from just borrowing money from friends or family is that it is done through a peer to peer platform. By using it, you’ll be matched with other people willing to lend the money you require and will still need to undergo a credit check. Interest rates can be much lower, but this will depend on how good your credit rating currently is.

Read the Terms Carefully

Whichever option you choose to go forward with for motor finance should be carefully considered. Not all options will work for everyone and nearly all will require you to have a good level of credit. You should only enter into an agreement you can afford to maintain. This way, you can focus on enjoying your new vehicle, rather than worrying about how to pay for it and how much interest you’re paying back.

For more of our great articles, read these:

Yes, You Can Buy Someone else’s Debt

Here Are Some Handy Debt Free Charts

What Kind of Interest Will You Have On A $60,000 Loan?

The Complete Guide To Getting Out of Debt

 

Image source: GotCredit, via Flickr.

Filed Under: Credit Tagged With: being debt free, Borrowing money, car loans, cars, debt

Determining Your Maximum Debt Limit: How Much Debt is Too Much

December 20, 2019 | Leave a Comment

When you look back on what you have been able to accomplish in your life, chances are that it was all possible due to debt.

Without a loan, you wouldn’t have owned your first home.

Without a loan, you wouldn’t have driven that first car of yours.

And without a loan, you couldn’t have earned that first degree.

In other words, debt can truly be a good thing. However, according to the old adage, you can have too much of a good thing. If you feel that you have piled up too many loans, there are tips to help you pay off your debt in a smart and efficient way.

So, how much debt is too much? Here is a rundown on how you can determine your maximum debt limit. Let’s get started!

How Much Debt Is Too Much?

A good way to determine how much debt is too much in your situation is to look at your ratio of debt to income.

To get this figure, you should divide your recurring debt each month by your gross income each month. You will then express this figure as a percentage.

Your monthly debt includes anything that you have to pay each month. This includes, for example, your mortgage, credit cards, car payment, and student loan.

Meanwhile, your gross income is the amount of money you bring home prior to paying taxes, Social Security, and insurance.

Example of Debt-to-Income Ratio Calculation

If you have $3,000 in current debt and generate a gross income of $6,000 per month, your debt-to-income ratio comes out to 50%. Unfortunately, this is not a good figure.

Many lenders generally like to see ratios of around 36% maximum. In fact, some financial advisors state that ratios of more than 20% are indicators that consumers are borrowing too much. Still, others say that near 30% is the magic number.

What does this tell us? It tells us that there’s no black-and-white answer for how much debt is too much for you. However, if you find that your disposable income each month seems insufficient, you’re probably carrying more debt than you should.

How to Help Yourself

If you’re wondering whether to get that next loan, ask this question to yourself first. “How much debt is too much?”

There are many different reasons to get a loan. Irrespective of the circumstance, you must eventually pay back the borrowed money. Therefore, it is always advisable to not borrow more than you need and your repayment ability.

When you start feeling the burden of too much debt, consolidating all of them into one can help you simplify your finances. In some cases, you may even be able to reduce the monthly payments.

The next time you decide to get a loan, determine your requirement, check about your ongoing debt payments and figure out how much you need. There are lenders who also help you to determine the ideal loan amount and then design a suitable repayment term for you.

Always find the right fit lender and loan fit for your financial situation.

Image source: Institute for Money and Technology.

Filed Under: Debt Freedom Progress, Get Out of Debt Tagged With: being debt free, debt, debt free advice, debt management

How One Couple Found Financial Freedom by Paying Off $500,000 of Debt

June 21, 2016 | 30 Comments

Can you imagine what it would be like to pay off $500,000 of debt?
Well, our guest today did just that!

[Read more…]

Our Debt Free Family
Our Debt Free Family

Team Our Debt Free Family is the administrative WordPress user account for Ourdebtfreefamily.com. Our Debt Free Family is a premium classic personal finance blog. Our mission is to inform, educate and help you get out of debt.

www.ourdebtfreefamily.com

Filed Under: Couples, Get Out of Debt, Inspiration, Interview, Stories, Video Tagged With: being debt free, debt payoff

  • Facebook
  • Pinterest
  • RSS
  • Twitter

About The Author

Amanda Blankenship is a 24-year-old full-time website manager and blogger. She is currently hacking her debt by saving money and investing, all while managing her family and enjoying her adult life.

 


Five Steps To Debt Freedom

Here are five simple guidlines that will help you pay off debt.  

1) Get an emergency fund so you don’t take on debt when something comes up.

2) List your debts. This way you know where you stand.

3) Use the debt snowball. Pay your debts from smallest to largest, or most expensive to least expensive.

4) Avoid new debt. No new credit cards or loans. Period.

5) Go all cash. After everything is paid off, switch to all cash.

Helpful Resources

The Free Checklist for a Strong Financial Plan

U of Tennesse Debt Repayment Plan Basics

Vertex 42's Debt Payoff Calculator

Savingadvice's Helpful Debt Forums

Jackie Becks Debt Blog

Our Most Popular Articles

How Alice and Scott Paid off $200,000 in Student Loans

Learn How Christine Paid off $500,000

Use the Debt Snowball to Create a Payoff Plan

Do Nothing and Save Money with the Paribus App

Thanks To Our Advertisers

Get the tools to start living debt free! Learn more…

Need a title loan in Jacksonville, Florida? Go to 1-800 Loan Mart. Fast and easy applications.

Copyright © 2022 Runway Pro Theme by Viva la Violette