What are the best debt consolidation options
Nobody likes to be in debt but the problem is that it is so easy to get into debt and then so incredibly hard to get out of it. The creditors have the big advantage and everything seems to be designed to keep you in debt and away from as much as your money as possible. It isn't always your fault if you get into debt, sometimes circumstances come up when you have to spend money in an emergency and the only way to do it is to get into debt. The good news is that it is possible to get out of debt and get back on your feet financially. One option that people look at when they are in debt is to get a debt consolidation loan but there are other options available so let's take a look at some different options.
What is debt consolidation? Basically it is when you take a few of your different debts and loans and combine them into one so that it is much easier for you to manage and the amount you pay back long term should be lower than if all your debts are kept separate. You can take different types of debts like personal loans, car payments, credit card balances and other debts and consolidate them into one. One option for doing this is to take out one loan big enough to cover the balance of all your debts, then you pay off each debt with this loan and then you have the just one loan to pay back. Another option is to keep your debts separated as they are, but go through a credit counseling agency and they help to manage the debts. You will give the agency one single payment and they will distribute it between your creditors and they may be able to negotiate better terms than you currently have.
You might want to consider a secured loan if you choose to take out one new loan to combine all of your existing debts. When the loan is secured with some form of collateral you will usually get a much better interest rate. Because the loan is secured there is less risk to the lender and they pass on that benefit to you in the form of lower rates. If you own a home and have equity in the home then you may be able to use your home equity to get a debt consolidation loan.
If you don't own a home, don't have equity in your home, or if you don't have anything else to use as collateral then you might want to work with a credit counseling agency. While they don't actually consolidate your debt as such it still seems as though your debt is consolidated since you are only making one single payment to them and they do the rest. They will also negotiate with all of your creditors to give you better terms so it does work out better financially than paying off each debt on your own. Using a credit counseling agency also doesn't impact your credit score very much, if at all.
If all your debt is credit card debts then you might consider transferring the high interest balances to cards with lower rates. Keep in mind however that there could be fees involved or the lower rates might only last a few months, so you need to read all the small print before making any decisions. It could still work out to be better in the long term but just make sure you find out all the details before making any changes.
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Article Source: Messaggiamo.Com
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