If you’re not racking up high interest credit card statements, you may have taken out student loans, a car loan, or high interest loans. There are ways to manage your debt to pay less interest, reduce monthly payments, and eventually get rid of all those loans. Here are three.
1. Look for better interest rates
A better interest rate allows more of your payments to go toward paying off the principal on the loan, so you get off your loan quickly. Here are some ways to get a better rate than what you were granted:
Apply for a low interest credit card and transfer your balance to it
Transfer balances from credit cards with particularly high rates to cards with lower rates
2. Consolidate your debt with a loan or line of credit
By consolidating your debt, not only will you be able to structure your monthly payments better, but you should also benefit from a lower interest rate than the combined rates of all your debts. Here are some ways to combine and manage your debt:
Apply for debt consolidation and pay only the monthly payment required on your new loan Instead of taking out another loan, set up a line of credit that you will pay back as you
3. Refine your repayment strategy
After consolidating your debts into as few loans or payments as possible, you may still need to prioritize which debts you are able to repay first. There are two theories about this.
Pay off high-interest loans first
Financial experts will advise you to tackle high-interest debts right away because interest is accumulating at high speed. If you have the capacity to pay off your outstanding loans at high interest, this might be the right strategy. However, it could be that the debt with the highest interest rate is your biggest loan or debt, which means it will take you longer to pay it off
Pay off smaller loans first Getting
rid of several low loans and debts might be a better solution. This will reduce your overall debt level and have the satisfaction of making gains from the start.
CIBC has a borrowing solution for you
CIBC Personal Loans and Lines of Credit are a flexible way to borrow at competitive interest rates. Call 1-866-525-8622 today to reach a CIBC advisor who can answer your questions and learn about CIBC loan products. You can also complete a loan application online now.