Is your list of debts growing consistently? Have your debts become quicksand that you are finding it difficult to come out from? Are you beginning to doubt your ability to pay off those credit card debts in time to start your journey towards financial freedom? You are not alone in this.
The average American has a long list of debts to settle. While there are so many alternatives to take in settling your debts, debt consolidation stands out as one of the most popular. To get the most from debt consolidation, may need a debt consolidation professional.
Debt consolidation has been lauded by many as a tool for quick debt settlement. A high level of success has been recorded by debtors who made use of debt consolidation. However, with a debt consolidation professional by your side, you can be sure that you will be properly guided on the best approach to use.
Why consolidate your debt?
You may have suddenly come to the point of realization that you are deep in debt. It could be credit card debts, medical bills, student loans, and even car loans. These debts will keep accumulating interest and hurting your credit score.
With a debt consolidation plan, however, you can merge the different payments you need to make and pay them off with lower interest. Debt consolidation allows a debtor to take out a single loan to settle multiple debts. A single debt makes it possible to come up with a manageable repayment plan and stop missing those repayment dates.
What do you stand to gain when you consolidate your debts?
- A manageable monthly payment.
- The possibility of paying lower interest.
- Higher possibility of getting out of debts faster.
Forms of debt consolidation
There are varied options to choose from in consolidating your debt. Enlisting the services of a debt consolidation professional will help you choose the best option that aligns with your needs.
Debt consolidation options come in the form of either a secured loan or an unsecured loan. You may decide to consolidate your debts using any of the options below.
#1. Debt consolidation loan
A debt consolidation loan offers debtors the option of taking either secured or unsecured loans to pay off their debts depending on the agreed term. These loans are offered by banks and individual or group lending platforms.
You should have it at the back of your mind that these lending platforms are set up to make a profit. Therefore, before jumping in to take out a loan, consult with a debt consolidation professional.
#2.Transfer of credit card balance
You can take care of those credit card debts by transferring the debts on all your cards to a new credit card. While card balance transfer is a consolidation option, yet, it comes with certain shortfalls.
Missing payments of the new card may increase the interest rate. The transfer charges that come with the process as well as conditions that have to be met can make this option not the haven you are dreaming of.
#3. Applying for a Home Equity Credit
Home equity line of credit (HELOC) gives debtors the option of taking out a loan using their home as collateral. The HELOC debt consolidation option is only available to homeowners. While it is possible to pay off your debts, HELOC may be a debt trap if not properly managed because you are giving up the value you have accumulated to pay off debts.
Wrapping up
Debt consolidation is not as straightforward as it sounds. There are many quick pits to avoid to make a success out of your debt consolidation which is why you need a professional to guide you through.
