Most people tend to spend more than they earn and you may be one of them. In fact, it is found that around forty per cent people tend to spend around ten per cent more than they earn. This results in debt which most of the people have in the present time. Debt has some negative impact I your life. It affects your relationship, marriage, attitude and behavior as well. Therefore, in order to be debt free and lead a happy and peaceful life there are ways more than one in which you can do it. You simply have to follow the procedures formulated to handle your possessions and money.
Falling In The Trap
Auto debt trap is one of such debt obligations which most of the people fall into but do not know the right ways to get over it. Such debt traps are the biggest and most challenging hindrances to a person’s financial freedom. With the simplification in the loan disbursal procedure, it is found that more than seventy per cent of the new cars that are bought is on loan. It is good to move about in your own vehicle but it is also equally important to come out of it. You will find people that just when they are getting to a point of paying off a car loan, they get dazzled by a newer model and purchase it in credit once again, thereby staying in the debt trap perpetually.
Reasons For Debt
Car is not like a home which appreciates in value over time. On the contrary the moment you take out the car from the showroom the value starts to depreciate. Sometimes, you spend a lot on a car and owe more on it than its worth. At this point if you want to sell it, you cannot get enough amounts to pay off the debt. There are three reasons to fall in a debt trap. Number one of them being the price of the cars are too expensive. The other reasons of it being the advertisement and marketing of expensive cars have been promising status appeal and the cost of financing has risen significantly.
Ways To Escape Auto Debt
There are ways in which you can escape the trap of auto debt and to get out of it provided you have a very strong resolve. The first step is to refrain from selling your car as soon as the loan gets over. You must actually keep it for three years more at least than the tenure of the loan. You must also accelerate your payment by making the minimum payment of all debts and more than that in order of the rate of the interest. After a loan gets paid off, still keep on making the payment to a spate account of yours to make a fund to buy your next car in cash. It must not be new, but it can be a used car of low mileage even.
Some Other Cautions
When you check with the dealer’s finance offer you should also check it with your bank as you can get an improved rate of interest of the dealer and save lots of money. Check also for the auto leasing and the extra charges for excess mileage. It may be so that at the end of the lease you owe quite a lot of money.
There are many people these days that are trapped in debt but wise people get out of it or manage it well by going for debt consolidation loan. This is getting much popular these days and is a smart move to make things go in your favor and have a tension free life.