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United Settlement » Auto Loan Debt
admin November 7, 2017

Auto Loan Debt Settlement Services

Auto loans are nothing short of huge business in the United States. At the end of 2016, the aggregate amount of auto loans in the U.S. approached $1.2 trillion, with the average new car loan exceeding $30,000 and offering a duration of five to seven years. Given that auto sales comprise approximately 20% of all U.S. consumer spending, it follows that auto loans have become a significant driver of a record U.S. household debt level that now exceeds $12.7 trillion.

Auto Loans Debt Relief

Auto debt relief may include a debt consolidation or debt management program. Debt consolidation may reduce your payments on your auto debt. Instead of paying the auto debt separately, it would be included with the rest of your loan payments. A debt management plan may help you organize your debts and plan out the payback, including that of your auto debt.

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Two Main Types of Auto Loans

Most auto loans charge a simple (as opposed to compound) interest rate based on the outstanding balance that is repaid on a monthly basis and offer the option to be repaid in excess of the standard monthly payment. The advantages here are twofold – as simple interest expense is always less than compound interest expense, and having the option of paying beyond the standard monthly amount represents an opportunity to reduce interest expense over the life of the loan.

Meantime, a pre-computed car loan is one in which total interest expense for the life of the loan is added to the principal borrowed and divided by the number of months of the loan to arrive at a regular monthly payment amount. Pre-computed car loans do not offer the borrower the advantage of paying back in excess of this monthly payment amount and are therefore almost always more expensive than simple auto loans.

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Where to Go for an Auto Loan

The most common outlets for securing an auto loan are banks, credit unions and auto dealerships themselves. Working with a bank is often the best solution for getting the most favorable terms and lowest interest rate, though the process will likely take longer than working directly with an auto dealership. However, the convenience of working directly with an auto dealer comes with a price – as dealers are in the financing business to turn a significant profit – and the interest rate a car dealer charges will often be higher than that charged at a bank or credit union. If you are a member of a local credit union, that could represent a happy medium, as securing an auto loan there could prove both reasonably convenient and a good value.

Credit Requirements for Auto Loans

Though many lenders don’t have specific down payment requirements, depending upon your credit score, it can help significantly to make a down payment exceeding 10% of the automobile purchase price. Given that the value of a new car typically depreciates by over 10% as soon as an owner drives it home for the first time, making such a down payment reduces the lender’s risk and the probability that a borrower will owe more than the car is worth shortly following purchase.

If you are unable to make a significant down payment, you may want to consider an auto lease. Leasing does offer the appeal of a lower down payment and lower monthly payments, but comes with the major drawback that monthly payments won’t actually result in eventually owning the car, as is the case in monthly loan payments. Interest rates for auto loans are calculated inversely with credit scores, so those with excellent credit scores in the 700s can anticipate securing an interest rate at or below 4%. In fact, those with pristine credit scores above 750 should pursue zero-percent and low interest rate loans directly from dealerships.

A Few More Things to Know

However, if your score hovers in the mid-600s and below, you probably should avoid dealerships and work with a bank or credit union to secure a mid-single digit interest rate or even higher – possibly exceeding ten percent depending on the severity of the credit score weakness.

Auto loans are a form of secured debt, meaning that the vehicle will serve as collateral and can be repossessed in the event of non-repayment. Additionally, if you’re finding it difficult to secure a reasonable interest rate, try pursuing a short-term loan of 48 months or less, and be sure to avail yourself of all dealer incentives and rebates that can help reduce the overall cost of purchase. Finally, even if the interest rate on your car loan is high, look for opportunities to re-finance your auto debt following two years of making consistent monthly payments and any improvement in your credit score.

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December 28

Time and again, I did not know how to handle my debt

Time and again, I did not know how to handle my debt. Even when I paid my credit cards off, a few months later I was back in the same situation. But this year is different. I contacted United Settlement to see if we could work...

Buddy Ewing
December 27

Business debt relief is what I needed when I contacted the United Settlement crew

Business debt relief is what I needed when I contacted the United Settlement crew. They are committed to helping people like me who requires more help with business debt problems. I had several loans out for my deli, and these...

Lianne Finnegan
December 26

Student loan debt was the reason that I reached out to United Settlement

Student loan debt was the reason that I reached out to United Settlement. I had about 200K plus in student loan debt for my business degree. I recognized that I had to do something when I struggled to make the $1,000 student loan...

Wren Herrera
December 20

There is nothing worse than falling ill and then having to deal with super expensive medical bills

There is nothing worse than falling ill and then having to deal with super expensive medical bills that you really do not have the patience or experience to handle. I was pleased with my experience with United Settlement. They...

Jardel Shah
December 14

I took out a few personal credit cards to open my boutique

I took out a few personal credit cards to open my boutique. When than money ran out, I went on to take out more loans for my business. However, this quickly turned into a disaster. Today, I now have a mountain of debt without a...

Iain Holt
December 12

Who knew that auto loans were so negative for your credit lines

Who knew that auto loans were so negative for your credit lines? Especially, if they are not paid off right away. As a married couple, we had vowed to keep auto loan debt at bay. But, we found ourselves in a situation where we...

Avaya Adkins
December 07

I didn’t have a ton of debt when I contacted United Settlement

I didn’t have a ton of debt when I contacted United Settlement, but what I wanted from them was some information about how to handle my debt management. I knew that I needed some more information to get my business and personal...

Lucien Rojas
December 04

Federal student loans were the reason I ended up at United Settlement

Federal student loans were the reason I ended up at United Settlement. I had about $200K to pay back and I was not quite sure where to tackle that debt once I got out of school. But I reached out to that company and they provided...

Madiha Matthams
December 03

Everyone knows how horrible student loans are

Everyone knows how horrible student loans are. For me and my family, they had become more than just an annoying monthly bill. They had taken over our lives. That’s why I decided to take action and find a company like United Settlement...

Asim Horner
December 03

I wanted to be more informed about my own personal and business debt

The number one reason I chose to contact United Settlement was I wanted to be more informed about my own personal and business debt. When you have credit card debt, it can be extremely frustrating. Especially if you don’t know...

Frankie Mckee
November 29

I cannot believe I was finally able to find a company to actually help me pay off my debt

I cannot believe I was finally able to find a company to actually help me pay off my debt! I thought I would forever be chained to debt. But United Settlement offered me multiple solutions for paying off short- and long-term debt....

Justine O'Ryan
November 21

What your money can do for you.

The great reviews that you have thanks.

Jerry Conley
November 19

Dealing with high interest auto loan debt was difficult for me and my wife

Dealing with high interest auto loan debt was difficult for me and my wife. We thought we got a good deal, but it actually was a horrible loan. So, we reached out to United Settlement, and they got to work creating a debt repayment...

Cathal Brett
November 12

No one really wants to go bankrupt, and neither did my family

No one really wants to go bankrupt, and neither did my family. But fortunately, we did not have to go that route. It was our last resort, but United Settlement helped us figure out a way around bankruptcy for good. They gave us...

Aliesha Ward
November 08

I had been through about 5 different credit counseling agencies before I found United Settlement

I had been through about 5 different credit counseling agencies before I found United Settlement. I had read through their reviews and made the decision to move forward with them. I also was so impressed by their free information...

Filip Rosas
November 07

Save time and money

Just what I needed, already had a company I was working with and I switched because I was able to same some money. Brian and Alfred were really nice and helpful

Susanna Fasenmyer
November 07

As a business facing some unwanted financial difficulties

As a business facing some unwanted financial difficulties, we were at a loss for what to do next when our debt started to soar. We took a closer look at our financial situation by contacting United Settlement. These guys were very...

Warren Hutchinson
November 02

I had no clue how to create a debt management plan

I had no clue how to create a debt management plan and in fact, I didn't even know what a debt management plan was. Fortunately, I reached out to United Settlement before I had too much debt to tackle. I was so pleased with the...

Bobbi O'Quinn
October 31

Being burdened by debt is one of the biggest struggles we faced as a family

Being burdened by debt is one of the biggest struggles we faced as a family. But these people at United Settlement were very helpful in deciphering the different debts we had and then coming up with a debt consolidation planned...

Dawn Mercer
October 29

Student loan debt was my worst enemy before I ran into United Settlement

Student loan debt was my worst enemy before I ran into United Settlement. I really thought I would just have terrible credit for the rest of my life because I will never get out from underneath it. It was so stressful of an experience....

Forrest Guest

Auto Debt FAQ

How to calculate debt to income ratio for auto loan?

A good debt to income ratio for an auto loan is 40% or less, meaning that if an individual earns $5,000 per month, debt payments should not exceed $2,000. Debt includes installment loans, credit card debt, student loans, and housing payments.

What kind of debt is an auto loan?

An auto loan is a form of secured debt, because the borrowing is collaterally backed by the automobile. It is also considered a form of installment debt, as payments are typically made monthly.

Are you responsible for debt after auto repossession?

When a vehicle is repossessed, the balance due on the loan remains, along with repossession costs that are often added to it. Even after your car has been repossessed, the auto lender can seek collection and sue for a deficiency judgment. Even if your vehicle is sold at auction, the amount raised may not be enough to cover the deficiency owed, leaving you owing the remainder.

Can auto repossessions be included on a debt relief program?

When a vehicle is repossessed and sold, it is often the case that the money raised is not enough to cover the debt owed, and a deficiency results. In the case of a deficiency, many lenders are willing to set up a reasonable payment plan to pay the deficiency off over time, or may agree to a lump sum settlement when proof of financial hardship is established.

How to get an auto loan after debt consolidation?

Getting an auto loan approved following debt consolidation is not especially problematic. In general, even when a credit report includes negatives related to debt settlement or debt consolidation, other existing positives on the report from other accounts will at least partially offset the negatives. Generally, one year is sufficient time to establish some positives on a credit report following debt consolidation, and making timely repayment on a car loan goes a long way toward rebuilding a credit profile.

Can a car loan be included in debt consolidation?

Debt consolidation traditionally involves combining and paying off multiple unsecured debts, such as credit card debt, personal installment loans, medical debt and some student loans, from the proceeds of one single loan, typically resulting in a lower blended interest rate and monthly payment. Secured debts, such as auto loans and home mortgages, are backed by collateral that can ultimately be seized in the event of default and are therefore not eligible for traditional debt consolidation. However, many lenders do provide car loan consolidation, which combines multiple auto loans with varying payment cycles, interest rates, and minimum payments, and therefore functions in essentially the same manner as traditional debt consolidation – providing the dual benefits of streamlining the repayment process while simultaneously lowering interest expense and the total amount repaid over time

How to get a car loan with bad credit?

Individuals pursuing a car loan who have bad credit need to go about things a bit differently than those with strong credit. A weak credit history will usually limit the car loan amount, and it will also come with a higher interest rate attached – sometimes twice as high as the rate granted to someone with stronger credit. However, getting a car loan with bad credit is possible when you take the necessary time to prepare your credit report, pursue pre-approval before approaching auto dealerships, and avoid potentially crucial mistakes by verifying all documents prior to signing.

How does auto loan refinancing work?

Auto loan refinancing involves replacing a current auto loan with a new auto loan from a different lender, usually at a lower interest rate and/or with more favorable terms, such as a lower monthly payment or change in duration. In general – and especially when an individual’s FICO credit score has improved since the initial auto loan was taken out – it makes good sense for borrowers possessing a good repayment history to look for opportunities to refinance a car loan. In fact, some of the best auto loan refinancing opportunities emerge within two years of an individual making consistent monthly payments on an original auto loan, during which time a credit score often improves. Refinancing an auto loan frequently results in considerable interest expense savings over the life of the auto loan.

How to get out of auto debt?

In general, an effective way to get out of auto debt is through auto loan refinancing, which involves replacing a current auto loan with a new auto loan from a different lender, usually at a lower interest rate and at more favorable terms – such as a lower monthly payment or change in duration. In general – and especially when an individual’s FICO credit score has improved since the original auto loan was first granted – it makes sense for borrowers who possess a solid repayment history to investigate opportunities to refinance car debt. Refinancing a car loan frequently results in considerable interest expense savings over the life of the loan and helps make it easier to get out of auto debt faster.

When to refinance a car?

There are a number of instances when it can make sense to refinance a car loan. At the top of the list is when timely payments have been made for up to two years on the initial auto loan, resulting in credit score improvement and access to more favorable terms and a lower interest rate. Or, when the macroeconomic climate changes and interest rates decrease from those attached to the initial auto loan, refinancing will often lower your rate and aid in paying off the auto loan in less time while saving on interest expense. Remember – even if interest rates were low when you took out your initial auto loan, interest rates can fluctuate as a result of increased competition within the auto refinancing space as well as from changes in the regulatory environment. In other instances, when an auto loan was initially borrowed through the lending department of an auto dealership, the dealership will sometimes mark up the interest rate, as the lending arm of a dealership can be a significant profit center – especially when a potential borrower appears visibly excited about a new car purchase and fails to shop around sufficiently. Auto loan refinancing can help remedy that mistake.

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    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 30% including fees, over 12 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us.
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