Debt Payoff Archives

Jun

2025

Credit Card Late Payment Consequences

By Ashley Kilroy | Budgeting & Goals, Credit, Debt Payoff, personal_loan | Comments Off

Missing a credit card payment can happen to anyone. But a credit card late payment may also come with certain consequences, such as late fees, interest accrued on the credit card balance, and potential negative impacts to your credit score. The longer you go without paying your bill, the more consequences you may experience.

Here’s a look at what happens if you miss a credit card payment and solutions to help prevent this from happening in the first place.

Key Points

• Late payments can incur fees, increase interest, and harm credit scores.

• Credit card use may be restricted until the account is current.

• Payments over 180 days late can lead to account closure and charge-offs.

• Automating payments or setting reminders can prevent late payments.

• Debt consolidation strategies, like balance transfer cards or personal loans, can help manage debt.

When Is a Credit Card Payment Considered Late?

As soon as you fail to pay your credit card bill by the due date, it’s considered past due. Your credit card company may send you notices about it in the form of calls, emails, letters, or texts. You could also face some financial consequences for being late.

What Happens if You Make a Late Credit Card Payment?

Here are some of the ways that not paying your credit card bill on time could impact you.

The Credit Card Balance Could Increase

Even if you didn’t use the card to make new purchases during a particular billing cycle, making a late payment could still potentially increase your balance in a few different ways.

With even the first missed due date, the credit card company can charge a late fee of up to $30. If you miss another payment within the next six billing cycles, the late fee can go up to $41.

The silver lining here is that the late fee can’t be more than the minimum amount due on the account. So, for instance, if your minimum payment is $25, your late fee won’t exceed $25.

There’s also a chance the creditor could increase your interest rate if your payment is late by a certain number of days. Increasing your interest, or annual percentage rate, will also increase your total credit card balance because that new, higher rate (generally referred to as a “penalty APR”) will apply to the entire unpaid balance.

Not all credit card companies have penalty APRs for late payments, so check with your credit card company to verify.

Recommended: What Is APR on a Credit Card?

Your Credit Score Might Be Affected

Your credit score includes information about your credit history, such as your payment history and the standing of your accounts, so a late payment could have a negative impact.

Generally, creditors send information to credit bureaus using different codes to indicate if a payment is current or late. Since there is no credit code for payments that are one to 29 days late, they may use a “current” code.

Once the payment is more than 30 days late, however, creditors generally use the “late” code to denote that the payment is delinquent. But different creditors will send different codes at different times so there’s no way to know for sure when you will see the late payment reflected in your credit report.

Creditors may not report a late payment to credit bureaus until a full billing cycle has gone by with no repayment (typically 30 days). So, for example, if your payment’s due date was the 11th and you paid on the 13th, there’s a chance your credit won’t take a hit.

Although every situation is different, a late payment might end up staying on your credit report for several years. And because credit history is just one factor used to determine your credit score, it’s hard to predict exactly how a late payment will impact your overall score.

The Balance Could Be Charged Off

Another consequence of not paying your credit card bill is that the credit card company may not allow you to continue to use your card for other purchases until your account is in good standing.

What’s more, if your payment is 180 days past due, the credit card company can close your account and charge off the balance. “Charging off” means the credit card company will permanently close the account and write it off as a loss, but the debtor still owes the balance remaining.

Sometimes, credit card companies will attempt to recover what’s owed through their own collection department, but charged-off debts are sometimes sold to third-party collection agencies, which then attempt to get payment from the debtor.

Credit card companies do have leeway to work with their customers. Under FDIC regulations governing retail credit, the creditor can help customers who have had financial setbacks — like job loss or the death of a family member — get back on track.

This leniency is typically shown to people who are willing and able to repay their outstanding debt, and the FDIC encourages creditors to proceed with this step with a structured repayment plan and to monitor the progress of the plan.

Consolidate your credit card debt
and get back in control.

How to Resolve a Credit Card Late Payment

Say it’s a few days or more past your credit card bill’s due date, and you haven’t made a payment. Now what? Follow this advice.

Make a Payment Right Away

If the payment just slipped your mind, don’t panic. Paying the credit card balance in full immediately helps avoid accruing interest charges and potentially saves your credit score from dropping. Alternatively, you might want to ask your credit card company about arranging a payment plan to minimize the damage.

Negotiate Fees

Even though your credit score may not drop because of one missed payment, you may incur late fees or a penalty interest rate (or, more accurately, a penalty APR as mentioned above), which will likely increase your total balance.

However, sometimes credit card companies are willing to work with customers to waive those fees. Calling your credit card company to request a waiver of late fees could be a first step, especially if your account is up to date and you’re not a repeat offender.

If your credit card company seems unwilling to change your rate back to the original amount, you might consider asking if they will do so once you show responsible payment history.

Automate Your Credit Card Payments

To help prevent any late payments in the future, you may want to consider setting up autopay to cover the minimum payment on your credit cards.

This way, if a payment slips your mind, you shouldn’t face any late payment consequences. Setting your bill to be automatically paid in full a few days before the payment is due can ensure you pay your balance in time.

If you would prefer not to sign up for autopay, many credit card companies have an option to sign up for notifications that remind you when your payments are due.

Getting Out of Credit Card Debt

To avoid late credit card payments once and for all, you may want to consider solutions for getting out of credit card debt entirely. Strategies depend on your unique financial situation, of course, but here are some you might want to explore.

Budget to Get Out of Debt

Creating a budget can help you better manage your money so you know what you have coming in and going out. You can use either a simple spreadsheet or a spending tracker app to simplify your efforts.

Once you have a handle on how much extra money you can put toward your debt, you may want to select a debt repayment strategy, such as the snowball method or avalanche method.

With the snowball method, the focus is on paying off the smallest debt balance first and then moving on to the second smallest debt balance, and so on, while still making minimum payments on all debt. This type of method is meant to give a psychological boost.

The avalanche method tackles the debt with the highest interest rate. Since you’re starting with the most expensive debt, this strategy can be a big money saver in the long run.

Open a Balance Transfer Credit Card

If your credit is in good standing, opening a balance transfer credit card could be a solution. Usually, these types of credit cards come with low or 0% APRs for a certain period.

Some companies may offer up to 21 months of interest-free payments during the promotional period. But it’s important to note that while the introductory period might be interest-free, you may still have to pay a balance transfer fee between 3% and 5%.

Ideally, you would pay your credit card balance in full by the time the introductory period is over, which would allow you to avoid interest payments on the debt.

Keep in mind, however, many balance transfer credit cards have restrictions. For example, if you make a late payment, you may lose your introductory rate.

Another limitation may be that your introductory APR only applies to the transferred balance and all other transactions may have a higher rate.

Before taking out another line of credit, understand that it can impact your total credit score. Credit scores are calculated using several factors, including credit history and new credit, both of which could be affected when opening a new account.

Consolidate Debt with a Personal Loan

Another option may be to combine separate payments into one credit card consolidation loan, hopefully for a reduced interest rate. While a loan doesn’t erase your debt, it can help you focus on one monthly payment, which might enable you to pay down your debt faster.

As you compare rates, it’s important to understand how a new loan could pay off in the long run. If your monthly payment is lower because the term for a personal loan is longer, for example, it might not be a good strategy, because it means you may be making more interest payments and therefore paying more over the life of the loan.

You can use an online personal loan calculator to get an idea of how much interest you could save by using a personal loan to pay off debt.

The Takeaway

Late credit card payments can come with consequences, like late fees, interest, or a temporary hit to your credit score. And the longer your bill goes unpaid, the more consequences you may experience. Fortunately, there are ways to resolve a late payment, starting with making a payment as soon as you realize one is overdue, setting up autopay, and other tactics. If this kind of debt has become an issue, you might consider a personal loan to consolidate your debt.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Can you go to jail for not paying credit card bills?

No, you can’t be arrested for not paying your credit card bills.

What happens if you never pay your credit card bill?

There are some serious potential ramifications for not paying your bills. The delinquency may be noted on your credit report, which can damage your credit score. You could even face a civil lawsuit if the debt goes unpaid.

Can my creditor garnish my wages for not paying my credit card?

Yes, if your credit card debt has been sold to a debt collector, and the collector has a court judgment, then they can garnish your bank account or wages.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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SOPL-Q225-091

Jun

2025

Can a Parent PLUS Loan Be Transferred to a Student?

By Kayla McCormack | Debt Payoff, Student Loans, student_loan | No Comments

If you took out a federal Parent PLUS loan to help your child through college, you may be wondering if it’s possible to transfer the loan into your child’s name now that they’ve graduated and have an income. While there are no federal loan programs that allow for this, there are other options that let your child take over the loan.

Read on to learn how to transfer a Parent PLUS loan to a student.

Table of Contents

How to Transfer a Parent PLUS Loan to a Student
Parent PLUS Loan Overview
Can a Child Make the Parent PLUS Loan Payments?
Parent PLUS Loan Refinancing
Alternatives to Transferring a Parent PLUS Loan

Key Points

• Transferring a Parent PLUS loan to a student involves refinancing through a private lender.

• The student must apply for a new loan to pay off the Parent PLUS loan.

• Once refinanced, the student becomes responsible for the new loan’s repayments.

• Refinancing can potentially lower the interest rate and monthly payments.

• The process is irreversible, making the student solely responsible for the debt.

How to Transfer a Parent PLUS Loan to a Student

There are no specific programs in place to transfer a Parent PLUS loan to a student, but there is a way to do it. To make the transfer of the Parent PLUS loan to a student, the student can apply for student loan refinancing through a private lender. The student then uses the refinance loan to pay off the Parent PLUS loan, and they become responsible for making the monthly payments and paying off the new loan.

Here’s how to refinance Parent PLUS loans to a student.

Gather Your Loan Information

When filling out the refinancing application, the student will need to include information about the Parent Plus loan. Pull together documentation about the loan ahead of time, including statements with the loan payoff information, and the name of the loan servicer.

Compare Lenders

Look for lenders that refinance Parent PLUS loans (most but not all lenders do). Then shop around to find the best interest rate and terms. Many lenders allow applicants to prequalify, which doesn’t impact their credit score.

Fill Out an Application

Once the student has found the lender they’d like to work with, they will need to submit a formal application. They can list the Parent PLUS loan on the application and note that it is in their parent’s name, and include any supporting documentation the lender requires.

Eligibility Requirements for Refinancing a Parent PLUS Loan

To refinance a Parent PLUS loan to a student, the student should first make sure that they qualify for refinancing. Lenders look at a variety of factors when deciding whether to approve a refinance loan, including credit history and credit score, employment, and income. Specific eligibility requirements may vary by lender, but they typically include:

• A credit score of at least 670 to qualify for refinancing and to get better interest rates

• A stable job

• A steady income

• A history of repaying other debts

If approved for refinancing, the student can pay off the Parent PLUS loan with the refinance loan and begin making payments on the new loan.

Advantages of Refinancing a Parent PLUS Loan

The main advantage of refinancing a parent student loan like a Parent PLUS loan is to get the loan out of the parent’s name and into the student’s. However, there are other potential advantages to refinancing student loans, including:

• Lowering the interest rate

• Reducing the monthly payments

• Paying off the loan faster

• Helping the student to build a credit history

Disadvantages of Refinancing a Parent PLUS Loan

While it may be beneficial to refinance a Parent PLUS loan into a private loan, there are some disadvantages to Parent PLUS vs. private loans that should be considered. The drawbacks include:

• Losing federal student loan benefits, including income-driven repayment, deferment options, and Public Service Loan Forgiveness

• Possibly ending up with a higher interest rate, especially if the student has poor credit

• The student is solely responsible for the monthly payment, which might become a hardship if their income is low

If you do choose to refinance your Parent PLUS loan, you should note that this process is not reversible. Once your child signs on the dotted line and pays off the Parent PLUS loan, the debt is theirs.

Parent PLUS Loan Overview

The Department of Education provides Parent PLUS loans that can be taken out by a parent to fund their child’s education. Before applying, the student and parent must fill out the Free Application for Federal Student Aid (FAFSA®).

Then the parent can apply directly for a Parent PLUS loan, also known as a Direct PLUS Loan.

The purpose of a Parent PLUS loan is to fund the education of the borrower’s child. The loan is made in the parent’s name, and the parent is ultimately responsible for repaying the loan. Parent PLUS loans come with higher interest rates than federal student loans made to students, plus a loan fee that is the percentage of the loan amount. These loans are not subsidized, which means interest accrues on the principal balance from day one of fund disbursement.

Parents are eligible to take out a maximum of the cost of attendance for their child’s school, minus any financial aid the student is receiving. Payments are due immediately from the time the loan is disbursed, unless you request a deferment to delay payment. You can also opt to make interest-only payments on the loan until your child has graduated.

Pros and Cons of Parent PLUS Loans

Parent PLUS loans allow you to help your child attend college without them accruing debt.

Pros of Parent PLUS loans include:

You can pay for college in its entirety. Parent PLUS loans can cover the full cost of attendance, including tuition, books, room and board, and other fees. Any money left over after expenses is paid to you, unless you request the funds be given directly to your child.

Multiple repayment plans available. As a parent borrower, you can choose from three types of repayment plans: standard, graduated, or extended. With all three, interest will start accruing immediately.

Interest rates are fixed. Interest rates on Parent PLUS loans are fixed for the life of the loan. This allows you to plan your budget and monthly expenses around this additional debt.

They are relatively easy to get. To qualify for a Parent PLUS loan, you must be the biological or adoptive parent of the child, meet the general requirements for receiving financial aid, and not have an adverse credit history. If you do have an adverse credit history, you may still be able to qualify by applying with an endorser or proving that you have extenuating circumstances, as well as undergoing credit counseling. Your debt-to-income ratio and credit score are not factored into approval.

Cons of Parent PLUS loans include:

Large borrowing amounts. Because there isn’t a limit on the amount that can be borrowed as long as it doesn’t exceed college attendance costs, it can be easy to take on significant amounts of debt.

Interest accrues immediately. You may be able to defer payments until after your child has graduated, but interest starts accruing from the moment you take out the loan. By comparison, federal subsidized loans, which are available to students with financial need, do not accrue interest until the first loan payment is due.

Loan fees. There is a loan fee on Parent PLUS loans. The fee is a percentage of the loan amount and it is currently (since October 2020) 4.228%.

Can a Child Make the Parent PLUS Loan Payments?

Yes, your child can make the monthly payments on your Parent PLUS loan. If you want to avoid having your child apply for student loan refinance, you can simply have them make the Parent PLUS loan payment each month instead.

However, it’s important to be aware that if you do this, the loan will still be in your name. If your child misses a payment, it will affect your credit score, not theirs. Your child also will not be building their own credit history since the debt is not in their name.

Parent PLUS Loan Refinancing

As a parent, you may also be interested in refinancing your Parent PLUS loan yourself. Refinancing results in the Parent PLUS loan being transferred to another lender — in this case, a private lender. With refinancing, you may be able to qualify for a lower interest rate. Securing a lower interest rate allows you to pay less interest over the life of the loan.

When you refinance federal Parent PLUS loans, you do lose borrower protections provided by the federal government. These include income-driven repayment plans, forbearance, deferment, and federal loan forgiveness programs. If you are currently taking advantage of one of these opportunities, it may not be in your best interest to refinance.

Parent Plus Loan Consolidation

Another option for parents with Parent PLUS loans is consolidation. By consolidating these loans into a Direct Consolidation Loan you become eligible for the income-contingent repayment (ICR) plan, which is an income-driven repayment (IDR) plan. (Parent PLUS loans are not eligible for IDR plans otherwise.)

On an ICR plan, your monthly payments are either what you would pay on a repayment plan with a fixed monthly payment over 12 years, adjusted based on your income; or 20% of your discretionary income divided by 12 — whichever is less.

One thing to consider if you consolidate a Parent PLUS loan is that you may pay more interest. In the consolidation process, the outstanding interest on the loans you consolidate becomes part of the principal balance on the consolidation loan. That means interest may accrue on a higher principal balance than you would have had without consolidation.

Alternatives to Transferring a Parent PLUS Loan

Instead of learning how to transfer Parent PLUS loans to a student, you could opt to keep the loan in your name and have your child make the monthly loan payments instead. But as noted previously, if you go this route and your child neglects to make any payments, it affects your credit not theirs. Also, when the loan remains in your name, the child is not building a credit history of their own.

You could also choose to consolidate Parent PLUS loans, as outlined above. Just weigh the pros and cons of doing so.

And finally, you could refinance the loan in your name to get a lower interest rate or more favorable terms, if you qualify.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

What if I can’t pay my Parent PLUS loans?

If you are struggling to pay your Parent PLUS loan, get in touch with your lender right away. One option they may offer is a deferment or forbearance to temporarily suspend your payments. Keep in mind that with forbearance, interest will continue to accrue on your loan even if payments are postponed.

You could also consider switching the repayment plan you are enrolled in to an extended repayment plan, or refinancing your loan in order to get a lower interest rate.

Can you refinance a Parent PLUS loan?

Yes, you can refinance a Parent PLUS loan through a private lender. Doing so will make the loan ineligible for any federal borrower protections, but it might allow you to secure a more competitive interest rate or more favorable terms. You could also opt to have the refinanced loan taken out in your child’s name instead of your own.

Is there loan forgiveness for Parent PLUS loans?

It is possible to pursue Public Service Loan Forgiveness (PSLF) with a Parent PLUS loan. To do so, the loan will first need to be consolidated into a Direct Consolidation loan and then enrolled in the income-contingent repayment (ICR) plan.

Then, you’ll have to meet the requirements for PSLF, including 120 qualifying payments while working for an eligible employer (such as a qualifying not-for-profit or government organization). Note that eligibility for PSLF depends on your job as the parent borrower, not your child’s job.

What happens if a Parent PLUS loan is not repaid?

If you can’t make the payments on a Parent PLUS loan, contact your loan servicer immediately to prevent the loan from going into default. The loan servicer can go over the options you have to keep your loan in good standing. For instance, you could change your repayment plan to lower your monthly payment. Or you could opt for a deferment or forbearance to temporarily stop the payments on your loan.

Can a Parent PLUS loan be consolidated with federal loans in the student’s name?

No, Parent PLUS loans cannot be consolidated with federal student loans in the student’s name. You can only consolidate Parent PLUS loans in your name.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SOSLR-Q225-032

Jun

2025

What We Like About the Snowball Method of Paying Down Debt

By Julia Califano | Debt Payoff, Financial Independence | No Comments

Dealing with debt can be a very stressful experience and make you feel as if you’ll never be able to pay off what you owe. If you find yourself struggling to manage multiple debts, the snowball method can provide a practical and effective strategy to regain control of your financial situation. This method, popularized by personal finance expert Dave Ramsey, focuses on paying off debts in a specific order to build momentum and motivation.

Read on to learn how the snowball debt payoff method works, including its benefits, plus alternative payoff strategies you may want to consider.

Key Points

• The snowball method lists debts from smallest to largest, focusing on the smallest first.

• Quick wins and a sense of accomplishment are key psychological benefits.

• The avalanche method targets high-interest debts to save on interest.

• The snowball strategy builds momentum, though the avalanche technique can be more cost-effective.

• The best approach for debt payoff depends on individual circumstances and goals, with personal loans being another popular option.

Building the Snowball

With the snowball method you list your debts from smallest to largest based on balance and regardless of interest rates. The goal is to pay off the smallest debt first while making minimum payments on other debts. Once the smallest debt is paid off, you roll the amount you were paying towards it into the next smallest debt, creating a “snowball effect” as you tackle larger debts.

Getting rid of the smallest debt first can give you a psychological boost. If, by contrast, you were to try to pay down the largest debt first, it might feel like throwing a pebble into an ocean, and you might simply give up before you got very far.

A Word About Paying Off High-interest Debt First

From a purely financial perspective, it might make more sense to first tackle the debt that comes with the highest interest rate first, since it means paying less interest over the life of the loans (more on this avalanche approach below).

However, the snowball method focuses on the psychological aspect of debt repayment. By starting with the smallest debt, you experience quick wins and a sense of accomplishment right away. This early success can then motivate you to continue the debt repayment journey. In addition, paying off smaller debts frees up cash flow, allowing you to put more money towards larger debts later.

Making Minimum Payments Doesn’t Equal Minimum Payoff Time

While you may feel like you’re making progress by paying the minimum balance on your debts, this approach can lead to a prolonged payoff timeline. The snowball method encourages you to pay more than the minimum on your smallest debt, accelerating the repayment process. Over time, as you pay off each debt, the amount you can allocate towards the next debt grows, increasing your progress.

The Snowball Plan, Step By Step

Here’s a step-by-step guide to implementing the snowball method.

1. List all debts from smallest to largest. You want to list them by the total amount owed, not the interest rates. If two debts have similar totals, place the debt with the higher interest rate first.

2. Make minimum payments. Continue making at least minimum payments on all debts except the smallest one.

3. Attack the smallest debt. Put any extra money you can towards paying off the smallest debt while still making your payments on others.

4. Roll the snowball. Once the smallest debt is paid off, take the amount you were paying towards it and add it to the minimum payment of the next smallest debt.

5. Repeat and accelerate. Repeat this process, attacking one debt at a time, until all debts are paid off.

A Word About Principal Reduction

It’s a good idea to reach out to your creditors and lenders and find out how they apply extra payments to a debt (they don’t all do it the same way). You’ll want to make sure that any additional payments you make beyond the minimum are applied to the principal balance of the debt. This will help reduce the overall interest you pay and expedite the debt payoff process.

Recommended: Personal Loan Calculator

Perks of the Snowball Method

The snowball method offers several advantages:

• Motivation and momentum The quick wins and sense of progress provide motivation to continue the debt repayment journey.

• Simplification Focusing on one debt at a time simplifies the process, making it easier to track and manage.

• Increased cash flow As each debt is paid off, the money previously allocated to it becomes available to put towards the next debt, accelerating the payoff timeline.

Alternatives to the Snowball Method

While the snowball method has proven effective for many, it’s not the only debt repayment strategy available. Here are three alternative methods you may want to consider.

The Avalanche Method

The avalanche method involves making a list of all your debts in order of interest rate. The first debt on your list should be the one with the highest interest rate. You then pay extra on that first debt, while continuing to pay at least the minimum on all the others. When you fully pay off that first debt, you apply your extra payment to the debt with the next highest interest rate, and so on.

This method can potentially save more on interest payments in the long run. However, it requires discipline and may take longer to see significant progress compared to the snowball method.

The Debt Snowflake Method

The debt snowflake method is a debt repayment method you can use on its own or in conjunction with other approaches (like the snowball or avalanche method). The snowflake approach involves finding extra income through a part-time job or side gig, selling items, and/or cutting expenses and then putting that extra money directly toward debt repayment. While each “snowflake” may not have a significant impact on your debt, they can accumulate over time and help you become free of high-interest debt.

Debt Consolidation

If the snowball, avalanche, or snowflake methods seem overwhelming, you might want to consider combining your debts into one simple monthly payment that doesn’t require any strategizing. Known as debt consolidation, you may be able to do this by taking out a personal loan and using it to pay off your debts. You then only have one balance and one payment and, ideally, a lower interest rate, which can help you save money.

Often called debt consolidation loans, these loans provide a lump sum of cash, usually at a fixed interest rate and are repayable in one to seven years.

Recommended: How Refinancing Credit Card Debt Works

The Takeaway

The snowball method offers a practical and motivational approach to paying down debt. By starting with small debts and building momentum, you can gain control of your finances and work towards becoming debt-free. It can be a good way to take action and commit to a debt repayment strategy. If it doesn’t suit you, you might consider the avalanche or snowflake method or a personal loan to consolidate debt.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What is the snowball method of paying down debt?

With the snowball method of paying down debt, you prioritize paying off the smallest balance first, no matter what its interest rate is. Once that debt is paid off, you prioritize the next smallest debt.

What is the disadvantage of using the debt snowball method?

The disadvantage of the debt snowball method is that, by prioritizing the lowest amount of debt, you may not be paying off the debt with the highest interest rate first. This means your most expensive debt could continue to grow as you pay off smaller debts.

What is the advantage of the debt snowball method?

By tackling the smallest debt first, regardless of interest rate, you can get a psychological boost from successfully paying that off and then build momentum for getting rid of your other debt.

*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOPL-Q225-103

Jun

2025

8 Tips on How to Refinance an Auto Loan

By Nancy Bilyeau | ALR, Debt Payoff | Comments Off

Refinancing an auto loan can be a smart financial move if you’re looking to lower your monthly payments, secure a better interest rate, or adjust the terms of your loan. Whether you’ve built your credit score, interest rates have dropped, or you simply want to free up cash flow, refinancing can provide potential savings over time.

It’s important to understand the auto loan refinancing process, from checking your eligibility to comparing lender offers and submitting an application.

Here, we’ll walk you through the steps to refinance your auto loan, helping you determine if it’s the right choice for your financial situation.

Key Points

• Before initiating the refinancing process, determine your objectives — such as lowering monthly payments, securing a better interest rate, or adjusting the loan term — to guide your search for suitable loan options.

• A higher credit score can enhance your chances of obtaining favorable refinancing terms.

• Having positive equity in your vehicle — meaning it’s worth more than the remaining loan balance — can make you a more attractive candidate to lenders.

• Some auto loans include prepayment penalties, and refinancing may involve additional fees. It’s important to assess these costs to ensure that refinancing will result in overall savings.

• It’s advisable to shop around and compare refinancing offers from various lenders, including your current financial institution, to find the best rates and terms.

What Is Auto Loan Refinancing?

Auto loan refinancing is the process of getting a new loan to pay down the balance of an original car loan. That all takes time, effort, and money (for the loan applications and servicing fees), so you should be sure you have a good reason before you go to the trouble of taking out an auto refinancing loan.

Ideally, your car is holding its resale value. If your car’s value is lower than what you owe on it, refinancing may not be a good option. Older cars could be problematic because no matter how well you’ve maintained it, a car depreciates in value over time.

What’s also important is to understand how to refinance an auto loan. If you extend your loan term or take cash out of your equity, you could wind up owing more than what your car is worth. This is called being upside down on your car loan. If you have to sell the car, you’ll need to pay the lender the difference. Clearly, this is to be avoided.

How to Refinance an Auto Loan

With refinancing, just as with your original deal, there are very particular car loan requirements.

Once your application is approved, your new auto loan provider will pay off your old auto loan or give you the funds to do so and become your auto loan manager. Future payments will go to the lender who handles your refinanced loan.

8 Tips for Refinancing an Auto Loan

These tips on how to refinance a car loan will help you avoid the pitfalls and ensure the process goes smoothly.

1. Compare Your Options

The first step is to list everything you desire from the new loan. It could be a lower monthly payment, a better interest rate, no or low fees, a streamlined application process, or solid customer service.

Now take a look around. You can start with the bank you already use for other services. Some financial institutions offer discounts on interest rates for their customers. Compare the rate offered by your current bank with rates from other lenders. Some people like to get prequalified with at least three lenders for comparison’s sake.

As you survey the refinancing landscape, remember that you may want to prioritize online auto loan refinancing options, since they tend to have fewer fees and competitive rates.

2. Determine When the Right Time Is for You to Refinance Your Car Loan

Figuring out when you should consider refinancing a car is key. People pursue a refinance for all kinds of reasons, including:

To Get a Lower Interest Rate

One of the chief benefits of refinancing a car is that the owner saves money over the life of the loan through a reduced interest rate. Take a vehicle for which the original loan was $25,000 and the refinance loan is $21,000. For a 60-month loan where the interest rate is cut from 7% to 5%, for example, the refinancing could save approximately $6,000 over the life of the loan.

To Shorten the Loan Term

Car owners who are cash flush may shorten their auto loan terms to pay off the car faster, thus saving significant cash with less paid in interest over the life of the loan.

To Extend the Loan Term

Car owners who need some financial breathing room after a job loss, an injury or illness, or a divorce or other family issue can extend the term of the loan to reduce the monthly (but not overall) loan costs.

To Get Some Extra Cash

If you have enough equity in your car, you might be able to take out a refinance loan that’s more than what you owe, known as a cash-out car refinance. But realize that if you opt for this kind of refinancing, you will still have to pay back both the car loan and the extra money.

Recommended: Smarter Ways to Get a Car Loan

3. Get the Paperwork Ready First

Before applying for an auto loan refinance, it’s best to be prepared. Documents you may need include:

Original Auto Loan

Lending institutions will require the original loan paperwork to process a new loan. The original loan paperwork should include the loan amount, the monthly payment, the interest rate, the payoff number, and the up-to-date loan balance.

Vehicle Information

Auto loan providers will also ask for your current vehicle information. This document should include the vehicle’s make, model, year, mileage, and vehicle identification number.

Auto Insurance Paperwork

Make sure you have your car insurance records, including type of insurance and the amount of the insurance included in the policy. Auto lenders won’t make a loan to an uninsured or significantly underinsured vehicle owner. That’s because the lender has a stake in the vehicle, as well. If the car is damaged or totaled, your lender will want to know it was properly insured.

Employment Records

Your auto loan refinancing lender may also ask for proof of income and employment to ensure you have the means to repay the loan.

Personal Information

In addition, a typical auto refinancing loan application likely includes the following:

• Name

• Date of birth

• Email address and phone number

• Address

• Social Security number

• Driver’s license number

• Work status

• Your bank’s name and info

4. Pay Attention to the Details

Before green-lighting an auto loan refinancing deal, you need to know the exact costs. Make sure to nail down how much you’ll save per month and, even more importantly, over the life of the loan. With an older vehicle depreciating in value, refinancing might not be the wisest course.

Watch out for fees. Auto refinancing can carry with it costs ranging from the application fee to title transfer fees, which can eat up savings. Not all lenders will charge significant fees, which is why it’s important to shop around.

5. Prepare for a Hit on Your Credit Score

Refinancing an auto loan, like any other kind of refinance, has the potential to lower your credit score temporarily. This is because it usually requires a hard pull credit check, and also the fact that you are replacing an older loan with a newer one.

When you apply for loans, each lender you apply with will request a credit check that causes a hard inquiry to be entered on your credit report. This can cause a small reduction in your credit score. If you qualify for and accept a loan offer, you’ll typically see another score dip.

Remember, prequalifying for the loan you’re interested in can reduce the number of hard inquiries.

Recommended: Does Financing a Car Build Credit?

6. Have a Backup Plan

What if you found a refinance deal you really wanted, applied, but were declined? You could consider applying through a different type of lender. Online lenders, for example, are typically easier to qualify for.

Or you could work on building your credit for a year and then applying again. Aside from the foundation of paying your bills on time, you could pay your credit card balances strategically and dispute the problems on your credit report.

7. Talk to Your Lender

Another key strategy for refinancing a car loan: Speak to your current lender, as you can refinance with the same lender. Not all lenders offer refinancing, however, so find out if yours does.

If they do, you’ll still want to shop around and see what other lenders can offer you. Ideally, you’ll want to go with the lowest interest rate and best terms. Be aware, though, that even though your original lender approved you for a loan the first time around, you may still need to provide them with proof of income. They will also likely check your credit to see if anything has changed. As mentioned, a hard credit check will lower your credit score temporarily.

8. Determine the Value of Your Car

Before going ahead with any refinancing deal, you need to know what your car is worth. You can look up your vehicle’s make, model, and year to get an estimate of its value.

If your car is still fairly new and in good shape, and you still owe quite a bit on your current loan, refinancing could help you save money. But if your auto loan is almost fully paid, refinancing may not make sense.

Typical Requirements to Refinance

It might help you improve your chances of finding a good refinance deal by getting familiar with what the lenders are looking for:

Strong Credit Score

Most lenders will expect a minimum refinance credit score from potential borrowers. Typically, a FICO® credit score of 700 or more will get you the lowest loan rates on an auto refinancing loan. That said, there are lenders that are willing to work with those with low credit scores.

History of On-Time Payments

Potential lenders will look at how well you did with paying off your existing loan. If you’ve failed to make payments on time, that won’t help your cause seeking refinancing.

Improvement in Circumstances

Lenders generally like to see an increase in income or some other quantifiable measuring stick that signals you are worth a lower interest rate.

Pros and Cons of Auto Loan Refinancing

Auto loan financing has advantages and disadvantages, and what’s best for you depends on your specific situation. But as you decide whether to move ahead with the process, weighing the pros and cons of refinancing can help.

Pros

• You may get a lower interest rate, which could save you money.

• Your monthly payment might be lower by either getting a lower rate or extending your loan term. Keep in mind, though, that extending your term may cost you more in interest over the life of the loan.

• You could pay off your loan earlier. If you opt for a shorter loan term than the one you currently have, you could pay off your car sooner.

Cons

• You may need good credit to qualify for the best rates.

• Refinancing may involve a hard credit check, which can temporarily lower your credit score.

• There might be additional fees you have to pay, including prepayment fees and origination fees.

Pros of Refinancing an Auto Loan	Cons of Refinancing an Auto Loan
You may get a lower interest rate	You may need good credit to qualify for the lowest rates
Your monthly payment could be lower	There may be a hard credit check, which can lower your credit score temporarily
You could pay off your loan earlier	You may need to pay additional fees, including prepayment, title transfer, origination, and application fees

Determining If You Should Refinance

Once you’ve studied the pros and cons of refinancing, you need to think about what makes the most sense for you at this stage. Is your debt-to-income ratio low? Is your credit history strong? Do you have a good credit score? If so, you may be able to get a lower interest rate, which could be beneficial. Just check to see what fees may be involved with refinancing to make sure you’ll still come out ahead.

In addition, if your car has a high value and you still owe a decent amount on your current loan, refinancing could save you money if you can get a lower interest rate.

But if your credit is not as strong as it could be, or you currently have a significant amount of debt, refinancing might not be the wisest move for you right now. Refinancing also likely won’t make sense if you are almost finished paying off your current loan. In that case, you may want to stick with what you have.

Applying for Auto Loan Refinancing

If you’re ready to move forward with refinancing, the application process is fairly straightforward. Just follow these steps:

• Shop around. As mentioned, you’ll want to explore your options with different lenders to find the best rates and terms you can qualify for.

• Fill out an official loan application. You’ll need to provide personal information, such as details about your employment and income. You may also need to give the lender pay stubs as verification. In addition, the lender will need your original auto loan, your car insurance information, and the make, model, mileage, and year of your car.

• Wait to see if you’re approved. The lender will review all your information and do a hard credit check. You’ll be notified if you are approved for the loan.

• Review the loan offer carefully. If the loan offer looks good, sign the loan agreement and keep a copy of the paperwork in a safe place. Often, the new lender will take care of paying off your previous auto loan, but you can check with your original lender to make sure. Then, start paying your new loan, per the terms of your loan agreement.

The Takeaway

Refinancing your auto loan can be a strategic financial move to lower your interest rate, reduce monthly payments, or adjust your loan term to better fit your current financial situation.

However, it’s essential to consider factors such as your credit score, the value of your vehicle, and any potential fees associated with refinancing. By thoroughly evaluating your options and understanding the implications, you can make an informed decision that aligns with your financial goals.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

With refinancing, you could save big by lowering your interest or lowering your monthly payments.

FAQ

What does it mean to refinance an auto loan?

When you refinance an auto loan, you are applying for a new auto loan and using that new loan to pay off your old auto loan. This gives you a new interest rate, a new loan agreement, and a new loan term.

How do you refinance an auto loan?

To refinance an auto loan, check your credit score, compare lender offers, and gather necessary documents like proof of income and vehicle details. Apply with a lender offering better terms, and if approved, use the new loan to pay off the existing one. Start making payments under the new agreement.

When might you consider refinancing your car loan?

A car loan refinance makes the most sense if you have a good credit score and, ideally, a higher income or some other positive marker than when you got your original car loan. If so, you are more likely to qualify for a lower interest rate and better terms.

Can auto loan refinancing hurt your credit?

When you apply for an auto loan refinance, the lender typically does a hard credit pull, which can lower your credit score temporarily. Your score generally recovers within several months.

Photo credit: iStock/miniseries

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOALR-Q225-038

Jun

2025

When Should or Shouldn’t You Refinance a Car Loan?

By Susan Guillory | ALR, Debt Payoff | Comments Off

Refinancing your car loan can be a smart financial move, but it’s important to know when it’s advantageous and when it might not be the best choice.

Refinancing can lower your monthly payments, reduce your interest rate, or shorten the loan term, potentially saving you money. However, it’s not always beneficial — fees, extended loan terms, or worsening financial conditions can offset the advantages.

Keep reading to learn more about when you should refinance your car, when you shouldn’t, pros and cons of auto loan refinancing, and more.

Key Points

• Refinancing a car loan can lower monthly payments and interest rates.

• Consider refinancing if your credit score has improved or market rates have dropped.

• Evaluate the new loan term to ensure it doesn’t extend the repayment period too long.

• Check for any prepayment penalties on your current car loan.

• Communicate with your lender to understand all refinancing options and requirements.

7 Times When You Should Refinance Your Car

Here are seven situations in which you might want to consider a car loan refinance.

1. When You Can Get a Lower Interest Rate

Interest rates change all the time, especially as the economy rises and falls. Monetary policy from the Federal Reserve may influence consumer loan rates. Refinancing may be right for you if you can lock in a lower interest rate.

Among the pros and cons of refinancing a car is that it may provide you with a lower interest rate (pro), while temporarily causing your credit score to drop due to a hard pull inquiry (con).

Refinancing for a lower monthly payment in some cases may extend your term, and extending your term can saddle you with more interest charges over the life of your loan. An auto loan refinancing calculator can help you see whether a refinanced loan offer may increase or decrease your total interest costs.

2. When You’ve Built Your Credit

Another factor that may change over time is your credit. Credit-building activities (including paying your auto loan on time each month) may help your credit score. This may qualify you for lower interest rates on a refinanced auto loan.

Lenders look at several factors when determining your annual percentage rate of interest and the terms they will offer you. If your credit wasn’t excellent when you got your loan, you might not have gotten the best APR possible. But if you’ve built your credit since then, refinancing could open up better offers.

3. When Your Car Is Worth More Than You Owe

If you’ve kept your vehicle in top-notch shape and perhaps have been aggressive about paying more than you owed each month on the loan, your car could be worth more than the balance remaining on your loan.

If you’d like to take your time paying off the remainder, you might consider refinancing. There are several tips for how to refinance auto loans, such as comparing your options and paying attention to the details.

4. When You Can Pay Your Car Off Faster

Some borrowers may prefer the longest repayment period possible for their auto loans because it means the lowest monthly payment. But those longer-term loans usually have higher interest rates than loans with shorter repayment periods.

If you can afford to make larger monthly payments, you’ll probably pay less in interest and get your car paid in full faster if you can refinance.

5. When You’re Struggling with High Payments

While you may not benefit from lower interest if you refinance over a longer period, it could help if you’re stressing to pay that higher amount each month.

Let’s say you currently have a loan with a term of four years and are paying $500 a month, which is really eating into your budget. Refinancing for a six-year term could drop your monthly payment to, let’s say, $375, so you might gain a little financial breathing room. Just be aware that you might have to pay more in interest over the life of the loan.

6. When You’re Unhappy with Your Lender

If you feel stuck with a lender who isn’t offering great customer service or is otherwise making your business relationship stressful, realize that you may hold the power to walk away by refinancing with another lender.

Before deciding to refinance your auto loan, get familiar with auto loan terminology so you understand things like prepayment penalties, APR, and other terms that you’ll find in the fine print of your current loan agreement.

7. When Your Original Loan Was Through the Dealer

Refinancing may be ideal if you have car loan debt through the dealer. If you signed a retail installment sale contract when buying a vehicle off the lot of a dealership, the dealer may have sold the retail installment contract to a third-party lender, such as a bank or finance company.

This is called indirect financing because it leaves you indebted to a third-party financial institution that didn’t provide you with the auto loan financing directly. Dealerships that arrange indirect financing don’t necessarily arrange the best terms and conditions for you, so exploring your refinancing options may be right for you.

When Shouldn’t I Refinance My Car Loan?

Just as important as knowing when to refinance a car is knowing when not to do it. It can be tempting when you get those offers in the mail to refinance, but there are a few situations where you shouldn’t. Here are five things to be aware of:

1. When You’re Upside Down on Your Loan

If you owe more on your car loan than the car is worth, refinancing likely won’t help the situation. In fact, many lenders won’t even approve a loan if this is your situation. Your best bet might be to keep chipping away at what you owe.

One way consumers may avoid upside down auto loans is by making a sizable down payment when buying new or used vehicles.

2. When Your Car Is Older

The older your vehicle, the less likely a lender is to approve a refinance. Bank of America, for example, won’t fund loans for cars that are more than 10 years old or have more than 125,000 miles on them.

Why? Cars lose their value so rapidly that an older model may not be worth much by the time you seek financing for it. If you aren’t able to pay your loan, the lender has the right to seize the vehicle, but if it’s not worth much, that right doesn’t do the lender much good.

3. When You Don’t Have Much to Refinance

If you owe less than $7,500, you may have trouble finding a lender who wants to refinance such a small amount. That’s the threshold Capital One, for example, requires for auto refi loans, and other lenders may have similar requirements.

4. When You Bought the Car Recently

Refinancing might not be right for you if you bought your car recently. The value of a new car can plummet immediately once you drive it off of the lot. Unless you’ve made a sizable down payment on the car, your auto loan financing may be underwater when your repayment term begins. As mentioned earlier, refinancing might not be advisable if you’re upside down on your loan.

5. When Your Loan Has Prepayment Penalties

Another time when refinancing might not be right for you is if your existing car loan includes a prepayment penalty clause. A prepayment penalty is a fee that lenders may charge if you pay your loan off early.

Getting a refi loan in some cases may trigger a prepayment penalty. That’s because refinancing pays off your existing loan and replaces it with the terms and conditions of a new financing agreement. You can check your original loan agreement to see whether it includes a prepayment penalty disclosure.

Recommended: Refinance After Repossession

Pros and Cons of Refinancing an Auto Loan

As a consumer, you may ask, “Should I refinance my car?” There’s no easy answer to this question. Your specific situation may determine whether and when to refinance a car loan. Below, we highlight some of the pros and cons of refinancing an auto loan:

Pros of Auto Loan Refinancing

• May give you a lower interest rate

• May give you a lower monthly payment

• May give you a longer repayment term

Cons of Auto Loan Refinancing

• You may need good credit to qualify

• It may require a hard inquiry that can hurt your credit score

• You may pay more interest over the life of your auto refi loan

Does Applying for an Auto Loan Affect Your Credit Score?

Applying for an auto loan can hurt your credit score initially, but it may also benefit your credit score if you make the required car payments on time.

Getting your auto refi loan application approved means a lender will pay off your original loan agreement and replace it with new loan terms. The refinanced loan may feature a lower monthly payment than your original loan.

Applying for auto loans and auto loan refinancing can initially impact your credit score if lenders conduct a hard pull inquiry into your credit report. But know that if you’re shopping around, getting preapproved by multiple lenders may show up on your credit report as just a single inquiry as long as they’re within the same two-week period.

Refinancing a car loan with bad credit is possible, but you probably won’t get a great interest rate. If it’s possible, it might be worthwhile to spend time building your credit so you may qualify for a better rate down the road.

The Takeaway

Refinancing your auto loan could get you a better interest rate, shorten your loan term, or lower your monthly payment, if that’s your goal. However, there are cons of refinancing to consider, too. These include lender fees and possibly paying more in interest over the life of the loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

With SoFi’s marketplace, you can quickly shop and explore options to refinance your vehicle.

FAQ

When is refinancing an auto loan worth it?

Refinancing an auto loan may be worth it when you’re able to secure a lower interest rate or shorten your loan term. Depending on your circumstances, you may also find it worthwhile to refinance for a longer term and lower monthly payment, even if that exposes you to more interest charges over the life of the auto refi loan.

Can refinancing a car hurt your credit score?

Refinancing can initially hurt your credit score if lenders conduct a hard pull inquiry into your credit report. Hard inquiries may cause your credit score to drop by several points. But refinancing a car may also help your credit score in the long haul if you make required payments on time over the life of your auto refi loan.

When should you not refinance?

It’s best not to refinance a car if you owe more than the car is worth or if the car is more than 10 years old. The auto loan refinancing cost may include a number of fees, such as early termination fees, transaction fees, and title transfer fees.

Should I refinance now or wait?

The urge to refinance now may be strong, but waiting could potentially be a better option for you. Before refinancing your car, look at your credit, then check with lenders to see if you prequalify. If you aren’t able to get a lower interest rate than what you’re already paying, it might be better for you to wait.

Photo credit: iStock/miniseries

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q225-037

Credit Card Late Payment Consequences

When Is a Credit Card Payment Considered Late?

What Happens if You Make a Late Credit Card Payment?

The Credit Card Balance Could Increase

Your Credit Score Might Be Affected

The Balance Could Be Charged Off

Consolidate your credit card debt and get back in control.

How to Resolve a Credit Card Late Payment

Make a Payment Right Away

Negotiate Fees

Automate Your Credit Card Payments

Getting Out of Credit Card Debt

Budget to Get Out of Debt

Open a Balance Transfer Credit Card

Consolidate Debt with a Personal Loan

The Takeaway

FAQ

Can you go to jail for not paying credit card bills?

What happens if you never pay your credit card bill?

Can my creditor garnish my wages for not paying my credit card?

Can a Parent PLUS Loan Be Transferred to a Student?

How to Transfer a Parent PLUS Loan to a Student

Gather Your Loan Information

Compare Lenders

Fill Out an Application

Eligibility Requirements for Refinancing a Parent PLUS Loan

Advantages of Refinancing a Parent PLUS Loan

Disadvantages of Refinancing a Parent PLUS Loan

Parent PLUS Loan Overview

Pros and Cons of Parent PLUS Loans

Pros of Parent PLUS loans include:

Cons of Parent PLUS loans include:

Can a Child Make the Parent PLUS Loan Payments?

Parent PLUS Loan Refinancing

Parent Plus Loan Consolidation

Alternatives to Transferring a Parent PLUS Loan

FAQ

What if I can’t pay my Parent PLUS loans?

Can you refinance a Parent PLUS loan?

Is there loan forgiveness for Parent PLUS loans?

What happens if a Parent PLUS loan is not repaid?

Can a Parent PLUS loan be consolidated with federal loans in the student’s name?

What We Like About the Snowball Method of Paying Down Debt

Building the Snowball

A Word About Paying Off High-interest Debt First

Making Minimum Payments Doesn’t Equal Minimum Payoff Time

The Snowball Plan, Step By Step

A Word About Principal Reduction

Perks of the Snowball Method

Alternatives to the Snowball Method

The Avalanche Method

The Debt Snowflake Method

Debt Consolidation

The Takeaway

FAQ

What is the snowball method of paying down debt?

What is the disadvantage of using the debt snowball method?

What is the advantage of the debt snowball method?

8 Tips on How to Refinance an Auto Loan

What Is Auto Loan Refinancing?

How to Refinance an Auto Loan

8 Tips for Refinancing an Auto Loan

1. Compare Your Options

2. Determine When the Right Time Is for You to Refinance Your Car Loan

To Get a Lower Interest Rate

To Shorten the Loan Term

To Extend the Loan Term

To Get Some Extra Cash

3. Get the Paperwork Ready First

Original Auto Loan

Vehicle Information

Auto Insurance Paperwork

Employment Records

Personal Information

4. Pay Attention to the Details

5. Prepare for a Hit on Your Credit Score

6. Have a Backup Plan

7. Talk to Your Lender

8. Determine the Value of Your Car

Typical Requirements to Refinance

Consolidate your credit card debt
and get back in control.

Student Loan
Refinancing

Personal
Loans

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