Using Your Car’s Equity to Pay off Credit Cards
While this doesn’t have anything to do with Reverse loans, I thought at the time when this was shared with me, that it was a very creative idea to reduce unsecured debt and reduce or eliminate credit card payments each month.
I was at a local community street fair a couple of weeks about and talked with Summer O’Neil who was representing Lockheed Federal Credit Union. She explained to me how a person can not only get very low interest rates on autos but how they can use any equity they may have in their car to pay off credit cards, which we all know have very high rates.
So could it could be a nice solution for many people that have too much credit card debt but have equity in their car to leverage and pay off that debt. Of course, anyone reading this who just happens to be 62 years of age or older may want to use funds from a Reverse mortgage for the same purpose, plus with a Reverse loan, the proceeds would be significantly larger and they would not have a monthly payment.
Here is what Summer explained to me:
“Our auto loan rates for new or used are as low as 2.99% for 60-66 months . We can pull cash out from the equity of the vehicle to payoff other debts such as unsecured credit cards or personal loans with no rate increase. There are some guide lines on the miles on the car and Fico score.
The credit score would have to be 730 or above for up to 90% Loan to value including any current balances owed on the vehicle. The other option we talked about is share secured loan. This is a type of loan where your savings account here with Lockheed FCU would be the collateral for a loan with an interest rate of 2.25%. There is no income proof/job or credit score/history requirements because your savings is the secured collateral.
Your savings account will earn 0.25% so that gives you a net rate of 2.00% paid on this loan. The max term for any dollar amount is 60 months or 5 years. The benefits are that you can save your money the way you might be doing now as well as pay the lowest loan interest with a fixed payment and rate of 2.00% As you make payments your secured funds will be available by the amount of each payment minus the interest paid.
We have other options like this that will allow you to have a CD secured loan and make 0 payments for 18 months. Some times Investors like these types of option or people getting lump sums of money in the future.”
If you would like to speak with her for more information, here is Summer’s contact information: