How to Lower Monthly Payments

With a rise in the cost of living, expenses can increase all around. This means higher monthly payments. However, if you are careful and use good sense with credit purchases, you can save money and get what you want as well as what you need.

Instructions

Develop a Strategy to Lower Monthly Payments

1. Check out your credit rating score to see what it says about you. Creditors will look at your situation periodically to see whether or not to offer you a new payment option or some other enticement. Pay off balances before the due date to improve your credit rating.

2. Make a chart of your bills. Find strategies to lower these individually. As interest rates rise, all of your bills may be in danger of rising as well. Pay off anything that has only a few hundred dollars balance. Call the customer service department of these creditors and ask about getting a better rate. If you have a good history with them, they will want to keep your business.

3. Switch a monthly bill over to a lower interest rate and you will lower your payments. Try this with credit card promotions, department store accounts and even utility bills. Now that electricity companies have been deregulated, you can shop for a better rate on utilities. This translates into lower monthly payments for you.

Use Your Home to Lower Monthly Payments

1. Take out a home equity loan. If you have been living in your house for 10-15 years, you should have equity built up in your account. It is possible that your home is worth 25 percent more than when you purchased it. This helps when banks consider a home equity loan for you.

2. Refinance your home to take advantage of lower interest rates. Take the balance owed on your home loan and refinance it at a lower rate. This tactic could save you several hundred dollars a month if the numbers are low enough.

3. Consider the length of the new loan. You don't need to take out a loan for another 30 years if your home is already 50% paid off. However, you should make it for at least 15-20 years if you want lower monthly payments.

Persuade Creditors to Lower Your Monthly Payments

1. Pay down your credit cards and consider making the occasional additional payment. Interest that accumulates on the balance keeps bills high.

2. Lower payments by using a debt management or credit counseling company. Either of these companies may be able to negotiate lower rates with your creditors. However, these modifications will go on your credit report as evidence that you were overextended.

3. Combine your debts into one account by making a debt consolidation loan. You will have one smaller payment by adding all of the original payments together.

Tips & Warnings

• If possible, pay your required minimum payment plus 50 percent every month. Do this for a few months and your monthly payments will be significantly lower.

• Bankruptcy, credit management companies or consumer counseling will lower your payments, but they will damage your credit rating.

Resources

• Lower My Monthly Payments shows how to save with a home equity loan.
• Credit Advisers gives information on debt management.
• No More Haggling shows you how to get lower car payments.