5 Actionably Tips to Pay Off Debt in 2023

5 Actionably Tips to Pay Off Debt in 2023

Posted on January 27, 2023

If the opening up after the pandemic has you wanting a new car, you’re not alone. We have seen a significant rise in enquiries for car loans over the past couple of weeks. Some people wanting a new car are carrying a lot of debt already. While this won’t necessarily prevent you getting the loan, it can complicate matters, and knowing how to pay off debt before a car loan may seem daunting or even impossible.

So, it’s for all of you that our Waterdown car loans team outlines some practical ways to pay off debt before a car loan application. We hope it helps!

Know what you owe

The first step in any plan is to assess the current situation. That’s what we’ll do here.

Make a list of everything and everyone you owe money to. If you have a household budget, add all debt to that and order them in order of interest rate, with the most expensive debt at the top.

If you don’t have a household budget, make one. Income in one column, outgoings in another and all debts in a third.

Create a payment plan

If you’re effectively managing everything, your plan will be minimal. If you’re struggling to pay everyone, your plan will be slightly more involved.

Use your household budget to assess how much you have left over each month and prioritize paying off the most expensive debt first. That way, more of the money you’re paying goes into paying the amount you owe and not the interest.

This will get everything paid faster.

If you don’t have anything left over at the end of the month and are struggling to stay afloat, the next tip is for you.

Identify areas of savings

Use your household budget to identify areas where you could make savings.

Depending on your situation, you have two options:

Make modest savings for expenses you could live without for the long term. Small things you can stop paying for without impacting your lifestyle too much.

Or

Make serious cutbacks for a finite amount of time. For example, cut back everything possible for 3-6 months. This will impact your lifestyle a lot but will be for a finite time with a definite end date.

There is no right answer here, just the answer that works for the way you live and your situation.

Automatic payments

Make sure you have automatic payments set for every outgoing you have. This will prevent you missing payments and help maintain your credit score.

If you have credit card debt, don’t depend on those minimum payments. Aim to pay off as much of the balance as possible each month. You’ll never get anywhere just paying the minimum.

Use an auto loan

If you have a good or excellent credit score and have yet to miss a payment, you may be able to use a Waterdown car loan to consolidate all your debt as well as buy a car.

Much will depend on your situation, your score, any down payment and how much debt you could settle with the loan. If you could only settle half for example, it wouldn’t really work so well. If you could consolidate all or the majority of your debts, it could work much better.

When you’re ready for a car lease or loan, get in touch with the Waterdown auto loan experts at Northway Ford for great deals on auto finance.

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