Considering paying off your car title loan debt with your tax return? Well, then you have got a reason to celebrate this year’s tax season, a time when many of us dread preparing for the tax deadline. That is because struggling with a car title loan debt is tougher and that too when it is accompanied by the pain of witnessing the possibility of losing one’s beloved vehicle.
Well save yourself from such pains and losses, for a tax refund can become your next ticket to paying off your car title loan debt faster and getting the lender off your back.
Car Title Loans are Meant to be Short Term Loans
Hence the reason why they are often accompanied with high-interest rates. This, however, varies from one lender to another and borrowers can do a little bit of research around before applying for a car title loan amount. Getting back to the point, a car title loan is actually meant to be a short loan that is given out for a short period of time. The general time period of such kind of loan is 30 days after which the borrower will have to pay back the principal amount with the interest.
However, when the time comes and the borrower is unable to pay back the total amount due, he or she tends to roll over the payment or extend the loan term. A rollover or a loan term extension causes the borrower to repay a great deal of money in interest and fees. So if you have started out with a $ 1,000 loan, then now it will become double the sum.
Now that you have got a tax refund, let’s make your car title loan a priority first so that you can clear up your debt and rid yourself from the worry of car repossession.
Helpful Tips: How to Pay off Car Title Loan Debts Using Tax Refund?
If the debt is standing between you and freedom, then here are some best methods that you can follow and pay off your debt using the tax refund. Read on –
#1 – Bi-Weekly Payment
The concept is derived from the bi-weekly mortgage. A bi-weekly payment means submitting the money that you owe twice a month. You can make your payment alternatively every two weeks. This will help you reach two types of goals –
You will be able to make an extra payment in one year that has 52 weeks. Now this will equal to 26 yearly payments or one extra.
You could also be able to shave off some months from your duration period.
Less accumulation of interest because now you are going to pay more often.
#2 – Round-Up Payment
Round-up payment is an effortless way to doing away with some extra dollars without the need of requiring additional funds. It’s simple! Almost like the bi-weekly payment procedure. If you have a due amount of $ 264.12, then you can round it up as $ 300. You will be making an extra payment of $ 35.88 every month. At the end of 12 months, you will be making an additional payment of $ 430.56. If your tax refund is sufficient, then bump up your payment procedure by paying off an extra $ 50 or $ 100. This can accumulate to form a significant amount that will even help to shorten your loan term.
#3 – One Extra Payment
The process is the same, but the methods are different. The objective is to show you how you can utilize this tax refund amount in the best way possible so that you do not have to feel the pinch. Thank God you have a tax refund to repay your loan debt or else the next few points would have delivered you some helpful tips on how to make some extra cash when you are still in debt.
In this method, divide your monthly due amount by 12 and add this to all your future payments. For instance, if the total amount each month is $ 264.12, then divide the sum by 12 and you will get $ 22.01. Add this to each of the monthly payments. The $ 264.12 will now become $ 286.13.
Some more on how to find the complete freedom from car title loan debt
#4 – Bare Bones Payment
Cut down your basic requirement expenses by more than 50 percent. If the tax refund is not enough to pay off your overall due amount, then the Bare Bones plan can help you to keep your tax refund supplemented. It is also an essential survival practice that can come in handy during situations when there is an emergency.
#5 – Special Sacrifice Payment
Sometimes, a tax refund can appear as an unplanned bonus that can tempt you to make some other plans – a vacation, a new TV, shopping spree, etc. Well, these belong to categories that need an update over a period of years and not on a monthly basis or even on a weekly basis. So if you have a car title loan debt that is due, then it’s time to make some special sacrifices only for your sake and relief.
#6 – Motivational Payment
This is one of the most essential criteria when a borrower needs to find the road to complete freedom from car title loan debt. Bring in the motivation, don’t lose hope. A motivation helps to serve as a constant reminder of how debt is keeping you away from your debt freedom. You are guaranteed to often lose your goal once, twice or even twelve times. But having a motivation can help you to keep coming back to the beginning from where you have set your goal.
Life in a debt
It’s pretty daunting you know, especially when the extra cash that you have received from the tax refund beckons you to lead a life of splurges and treats. But then, which one would you go for when you have a tax refund in hand and there is a car title loan debt honking at you from one end, and all the shimmers of the world beguile you from the other end?