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Posted in Auto Loans
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ctrooptx

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? lower debt or increase down payment for loan ?
would it be better to use part of my down payment for an auto loan to reduce credit card debt?

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pay credit cards first

I would never apply for an auto loan until my credit cards are paid off except for 1 card reporting a 2 to 10% balance.

I sucessfully brought my credit utilization on 3 cards to 2% doing this...

1) pay the lowest balance card first.  I did this so I could free up this money to pay on my other accounts

2) pay the next lowest balance card second

3) continue.

I didn't worry about paying highest interest card first.  I paid a bit more in interst, but freeing up monthly payments allowed me to pay more on my other cards, so it was close to a wash.

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Generally, yes. In several ways. Paying the highest interest rate loans first will free up monies that can be used later to accellerate payoff on other loans. A small increase in the down payment ammount does not substantially reduce your payments.  And then the reduction in credit utilization may allow you to qualify for a lower interest rate when seeking financing for your auto loan.

Bottom line is, only you can weigh the benefits based on your own actual credit situation.

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