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Can everyday Aussies raise their "debt ceiling"?

Can everyday Aussies raise their "debt ceiling"?

When the US government increased the nation’s debt ceiling last week to avert defaulting it was a timely reminder for personal borrowers around the world to consider their own finances. 

While we don’t have the spending levels to negotiate a $US2 trillion increase to our debt capacity – as the US government treasury exercised – Australians saddled with debt do have options when facing financial hardship.

Ask for help

Whether you are swamped with credit card debt or struggling to meet repayments on a car loan or personal loan, the first thing you should do is contact your provider and alert them to your situation.

Prioritise

The Australian government’s Money Smart website advises borrowers to prioritise secured debts such as your home and car loan over ongoing payments on unsecured debts like credit cards. But debtors should also consider how much interest they are paying on a loan or credit card when prioritising repayments.

Refinance

If you can’t meet repayments it can seem like a good idea to roll all of your loans into one, but consolidating debt is not always the best option. You’ll need to determine whether amalgamating debts will reduce interest and fees paid. Think about the loan term too; rolling a car loan into a mortgage may mean paying less interest, but over a longer period such as 20 years or more, by which time the car in question has been sold or retired.

Think ahead

Before jumping into debt, calculate how much you are comfortably able to afford in repayments, accounting for any interest rate rises. Even a small difference in interest rate can make a big difference to what you have to pay. The government’s Money Smart website has a free and easy-to-use budget planner that will help you to nut out your cash flow.

Weigh up your options

Finding the right financial products to suit your needs may be a seemingly overwhelming process given the volume of accounts and loans on the market. But that’s where a financial comparison site, such as RateCity, comes in to play. To find a low interest car loan for instance, all you need to do is select the amount you wish to borrow and the loan term before clicking the ‘find a loan’ button. Results are then instantly displayed on screen and ranked by advertised interest rate, application fee and monthly repayment.

Before taking on significant debt consult a financial planner, which may be able to offer a solution that will see you better off in the long term.

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Learn more about car loans

Can you get a chattel mortgage with bad credit?

Getting approval for a chattel mortgage with bad credit may be possible, given ‘chattel’ (usually a piece of equipment or car) is put up as security for the loan. That means if you fail to repay the loan, the creditor can recover the loaned amount by repossessing and selling the car or piece of equipment. This differs from unsecured car loans, where the asset is not tied to the loan and cannot be taken if you don’t meet the repayments. 

How to find a great car loan

Historically, finding a great car loan would require excess research ranging from visiting an excess of websites or making phone calls, but technology has moved on. Using RateCity, Australia’s leading financial comparison service, you can check out great deals from a range of lenders on the one site.

To start, select the amount you want to borrow and the length of the loan, narrowing your search to show just fixed or variable interest rate results.

Once you’ve indicated your search criteria, you’ll see an immediate list of lenders, ranked by interest rate or application fees. You’ll also be able to view the monthly repayment amount for each result, helping you to know what you can afford.

Up to six products can be compared side-by-side, complete with more information about each car loan, giving you more information about your options.

When comparing your car loan options, it’s ideal to keep in mind some points find a great car loan for your needs. Consider the following:

  • Choosing a low interest car loan can reduce costs
  • Selecting an option with low fees and charges is ideal, because these can really add up
  • Be aware of penalties, such as early exit penalties if you pay off the loan sooner than expected
  • Consider the features that best suit your situation

There are many ways to ensure that you get a great car loan. Ultimately, you’ll end up with the best deal by doing your research and selecting the most suitable product for you.

What are loan repayments?

Loan repayments are the regular payments you make to pay off your car loan. Loan repayments generally occur on a monthly basis, although many lenders will also give you the option of making fortnightly or weekly loan repayments.

How to get a chattel mortgage?

Both businesses and individuals may use a chattel mortgage, provided that the car is being used predominantly for business purposes. 

To apply for a chattel mortgage, you need to first consider your options and choose a suitable lender that meets your requirements. Once you have selected a lender, you can apply for the loan online by filling out a form. If the lender doesn’t offer an online application process, you can either call them or visit their nearest branch. 

After you’ve applied, the lender will ask you to supply documents that confirm your identification, income, job profile, etc. If everything is in order, most lenders will arrange the loan’s settlement, so all you need to do is pick up your car!