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Can I Refinance My Car or Consolidate All Debt? – Rose

“Dear Steve,

I have about $45K worth of debt. I have four credit cards with balances of $500 each. I have IRS debt of $1600 and $3000 balance on Best buy card. And a $38K auto loan. Truthfully, its the auto loan that is killing me. I pay 13% interest. SO now my loan is upside down. its higher then worth of car. My monthly payment is $953.

Don’t know exactly what I can do, I’d like to either refinance car or consolidate all debt and pay one payment rahter than 6 difference plus normal monthly expenses.

Can I either refinance my car or consolidate all debt.


I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.


Rose, I am certain you are painfully aware of the woes of today’s economy. One of the end results of this plight is exceptionally tight credit. Of course attempting to refinance the car is a great option and I think you should try but tight credit means limited loans being issued and rarely without a good credit score.

You also did not mention your income. That and a decent credit score will be key. A ball park figure to work with (and what a lending institution will be looking at) is your monthly debt should not exceed 36%. That percent should include not only all monthly debt obligations but also your rent/mortgage and your tax obligation.

The first thing I would try to do is contact your auto finance company and see if they can do anything about lowering the interest rate. Explain the situation to them. Don’t “cry” to them about your plight but suggest to them that without there assistance you may have to consider bankruptcy. If they are unwilling, then consider refinancing possibly through a credit union. Your credit score and income will be paramount.

It is very possible you may find your only recourse is allowing the car to be repossessed. This will free you of the payment but leave you a balance owing on the difference between what you owe and the amount the car was sold for on the auction block. At that point you may want to consider bankruptcy. On the good side of things, you will be free of the car and you can get something far more affordable.

You had referenced an interest in consolidation, which is another very good option assuming you have the credit score and the total monthly payback lowers your total payment of all debt included. At a minimum look into a consolidation loan through a credit union or other low interest loan group such as At the same time please realize it is rare that you can borrow your way of debt.

The key to your questions and the guide to your answer revolves around your income and your credit score.



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About Mike Killian

Mike Killian
Mike Killian is founder of Learning Credit and Debt Management. He has been writing and teaching about credit and debt management issues for over 12 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years. He has an MS in counseling and is a nationally certified as a Personal Finance Counselor. Mike can be found at

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