Maintaining positive debt ratios is difficult in times of economic uncertainty. Credit cards are notorious for high interest rates and fees. If you are unable to keep control over the payments, compounding interest can spiral into financial doom. To combat this problem, consumers search for refinance options and invariably wonder if their car loan can do more than pay for the shiny automobile in the garage.
Car Loan Basics
Car loans are lending agreements secured by your vehicle. In the event you default on payments, your lender has the option to take possession of your collateral and report the repossession to your credit. They are not general-purpose loans you can use for anything imaginable. This means you cannot walk into any automobile dealership and request an extra $2,000 to pay off your credit card balance. That being said, there are three ways to combine your credit cards with your car loan: rebates, refinances and title loans.
Rebate Option
Automakers offer cash incentives or rebates from time to time as a way to stimulate consumer interest in their brand and help dealers sell units. The way this works is not complicated. The maker offers the incentive on a specific model or model year. If you wish to purchase that vehicle and meet any additional stipulations they place on the sale, you take advantage of the rebate.
The most popular use of these cash incentives is applying it to the total purchase price of the car to obtain lower payments or less of a down payment. Unless the maker writes this into rules, you are under no obligation to use the rebate for the purchase. Instead, wait for the rebate check and use the proceeds to pay off or pay down your existing credit card balance.
Refinance Option
The auto loan refinance option only works if your credit history, the vehicle's age and your equity in the car all align. Lenders often require higher credit scores to refinance older vehicles. After a certain age, they will not touch the deal because the car's value continues to decline. If, however, your credit is in good shape, you owe far less than the vehicle's worth and it is not too old, you may apply for a refinance and receive cash back to apply toward your credit card balance. Requirements vary by financial institution, so always check with your lender for specifics.
Title Loan Option
In the event your car is fully paid and you hold a clean title---one free of outstanding liens---you may qualify for a title loan. For this loan, you request an amount less than or equal to your vehicle's worth using the title as collateral. Keep in mind that title loan companies can charge a higher rate of interest for this loan type than your financial institution. Although this is an option to combine credit cards with car notes, the interest rate or repayment terms can make it an undesirable option.
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