Debt consolidation can provide great help for easily eliminating debts. If you have a number of debts and their monthly installments and interest payments all add up to a very high amount, then consolidating these debts may be a wise choice. With this, you can lower your monthly debt payment and interest rate, to a nice affordable figure.
With so many debt consolidation companies operating on the internet and each promising to provide relief with your debt problems, the choice of a company can be quite difficult. This is because it is difficult to determine which program is better than the others. In such a situation, the following moves for consolidating debts can be quite effective.
Firstly, if you own a house and have some equity left in it then a home equity loan is a good option for consolidating your debts. This option comes with various advantages. The major advantage is that the interest rate on a home equity loan is quite low. Moreover, the interest paid on this sort of a loan is tax deductible. Besides this, you can raise a large sum of money through home equity loan and the repayment period is also longer.
Another option for homeowners is “cash-out” refinancing. You can refinance your home or property for a higher amount than the one you owe. The extra amount can then be used to pay off the debts. Moreover, the interest rate for home refinancing is really low. Beware that if you opt for a very long repayment period, then your interest payments can add up to a very large sum.
Another effective move for debt consolidation especially if you do not own any property is to refinance your car. This is a secured loan and can be effective if the amount you owe is less than the value of your car. The only disadvantage is that you could risk losing your car.
You can also opt for a personal loan to consolidate earlier ones. This is a useful option if you have a good credit score. Moreover, it is an unsecured loan which means that you will not have to give any of your assets as security.
Lastly, you can negotiate with your lenders for better terms and conditions. This is really simple to do as many credit card companies and lending firms have customer service representatives. These representatives are authorized to cut down the rates right away.
Whatever you do and whichever option you choose, just make sure that it eases your burden and is available at a cost affordable to you. If you are facing difficulty in deciding which move to make for debt consolidation, talk to a financial counselor. They will certainly be able to provide useful guidance.