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Consolidate Bills: Refinance or Personal Loan?

I would like to consolidate my car and my timeshare.

I would like to consolidate two bills.. My car and my timeshare.. Would my timeshare fall under a mortgage refinance loan or a personal loan..? I do not own a home .. yet. At the end of the year I will.

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Bill's Answer
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Highlights

  • There are three important criteria for getting a loan.
  • You may not be able to refinance and consolidate two different loan types.

I confess, I feel a little stumped by your question. That is because I simply do not know enough about your car and car payment, number of payments remaining and interest rate on the auto loan, your timeshare payments, any equity you may have developed (not likely) in the timeshare. I also have no idea of what your goals are and for what purpose you wish to consolidate only these two debts. Also, your comment about acquiring a home at the end of the year is a bit cryptic. Are you going to purchase a home, meaning applying for credit to do so, or are you expecting a gift or inheritance of a home and real property?

For now, I will make general assumptions about the debts and fashion general answers to see if I am anywhere near the mark.

If one of your goals is to create a single debt from these two notes, I do not see an advantageous way to accomplish this. The two forms of collateral are too disparate to act as collateral for a single note. An entirely different set of requirements apply when real estate is used as collateral than when personal property is the collateral.

If you do not use collateral the debt will be unsecured which practically ensures a considerably higher interest rate than either of the two existing notes.

Your timeshare interest is technically real property, and the current note is a real estate note and mortgage. See the Bills.com resource How do we sell a timeshare we can no longer afford? to learn more about selling a timeshare.

However, I doubt that you will find a non-captive real estate finance company to lend money on yours or any timeshare since usually they do not appreciate like normal real estate. On the open market they are treated as personal property in the nature of a lease or contract right. Please peruse the Bills.com Savings Center see if you can refinance the auto loan at an interest rate lower than the current auto note and extend the payments so that your monthly car note decreases by a significant amount.

Refinance the timeshare interest with the original lender if your inquiry shows that you might lower the payments and receive a better interest rate if you refinance. I hope this helps in your particular situation.

If you are interested in learning about how to qualify, generally, for a bill or debt consolidation loan I detailed a few criteria below:

Typically, there are several considerations when getting a loan — three of the most important are:

  1. Your loan-to-value
  2. Your debt-to-income ratio
  3. Your credit rating

Your credit rating is low, placing you in the subprime category, but that does not rule out getting a loan that meets your needs.

I will review each one in turn.

Loan to value

This is calculation looking at how much you want to borrow, relative to the value of the home. It is directly impacted by the amount of money that you can put down on your new home. The larger the down payment, relative to the value of the home, the less risk the lender has to take in extending to you a loan.

Debt to Income

This ratio looks at your monthly debt obligations (payments of interest and principal) as a percentage of your monthly income. If you have a significant amount of debt, your debt service burden may be too high for a lender to comfortably give you a loan. You need to either increase your income, or cut your debts.

Credit Rating

Your loan, including terms like interest rate and points, will depend on your credit worthiness. One measure of credit quality is a credit score (sometimes a specific 'FICO' score). Your credit rating is calculated based on several variables, including:
  1. Your payment history (do you have any late payments, charge-offs, etc.)
  2. The amount and type of debt that you owe
  3. If you have maxed out any of your trade lines
  4. Several other secondary factors such as the length of your credit history and how many recent inquiries have been made to look at your credit history.
If you have a good credit score you will find the best rates.

The Bills.com Refinance Calculator helps you to decide whether a refinance makes sense for your specific situation. The Home-Account Service allows you to see the very best rates that have already been qualified for based on your income, home value, and credit — and request that specific loan from the lenders shown. Or if you prefer to talk to a some lenders and negotiate the best terms with a few, get a Bills.com Quick Quote and get matched with some of the best lenders in the country based on your unique situation and needs.

The Best Rate May Not be the Best Deal

The interest rate of your loan should never be the sole consideration. In some situations, you may not want the offer with the lowest rate. If for example the low rate is dependent on taking a three-year adjustable rate loan, when you know that you will need to keep the loan for at least a year or two in to the adjustment period. In that case, you should consider a five-year or ten-year ARM, or a fixed-rate mortgage. Or if you need to get cash from the refinance to pay bills or use the cash for other purposes, then you might want to choose a mortgage with a slightly higher rate to get the loan that makes the most sense for your situation.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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11 Comments

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  • BA
    Aug, 2010
    Bill
    Please see the Bills.com student loans page to learn more about qualifying for a student loan.
    0 Votes

  • 35x35
    Aug, 2010
    I am a student and i want a loan for further studies. Can u please suggest me how can i get it?
    0 Votes

  • BB
    Jul, 2010
    Bob
    I am planning for a new home by the end of this month. I am really confused considerations should i go for!
    0 Votes

  • BB
    Jul, 2010
    Bob
    I have got more information from your system then also i have also get an information regarding it.
    0 Votes

  • BA
    Sep, 2009
    Bill
    See my reply to another reader who had a somewhat similar question Consolidate My Credit Card Debt for your options. As you are finding, a loan is going to be difficult until you can move away (in time) from the foreclosure.
    0 Votes

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