Interest rate on your future loan depends on your present debt-income ratio. Having a high debt to income ratio can lower your credit score and hence make you less credible in the market resulting in high interest payments. It is a smart move to pay off your debts as early as possible to reduce your debt burden, lower your debt to income ratio and simultaneously increase your credit score.

“With market recovering, many Americans are planning to purchase new vehicles in 2010. Even though they are ready to buy new cars, however they lack a lot on savings and high income. They are in search for auto loans with low interest rate. Auto sellers will either provide you with an auto loan at a low interest rate on a used car or if you have a high credit score you can get a new car at a lower rate. However, this is a very rare case especially after the hard hit of downturn. I am sure you would not want a used car if you are investing some money and having a high credit score also takes a lot of time.

You can save hundreds of dollars by saving a few dollars every month if you go for a loan modification procedure. This money can either be spent to pay off other debts or moved into your savings account. Please note that getting a low interest rate is highly dependent on a high credit score and a low debt to income ratio. The debt-income ratio must be less than 50% to avail the benefits of a low interest loan. Now you have two options, either increase your income or reduce your debts. Your debts will obviously be of high amount and hence to pay off that amount you need to negotiate with your bank to reduce it.

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