Are you heavy-laden with debt? Are you struggling to stay on top of payments because your credit card loans and debts are spread out? Are you looking for a more straightforward way to pay your debts every month? It’s time to consider debt consolidation.
With a debt consolidation loan, you can consolidate high-interest credit cards into one balance and make it easier for you to track and pay since you will only be required to make one payment and remember one due date.
In this article we will look at debt consolidation, the types of loans you can consolidate and the best debt consolidation loans to consider if you are looking to consolidate your existing debt into one easy monthly payment.
What Is Debt Consolidation?
As the name suggests, debt consolidation happens when you decide to combine some or all your existing debts into one debt so that you can make a single monthly payment. In today’s busy world, handling a fairly long list of payments every month can be overwhelming. Having a single payment to make every month instead of several can save time and help you keep track of all the payments.
Which Type of Loans Can You Consolidate?
There are two types of debts. These are unsecured debts and secured debts. It is important to note that not all debts and loans can be consolidated. Take time to do your research and also talk to lenders to find out if your current debts qualify for consolidation.
Unsecured debt means that the debt is not tied to any of your assets. Secured debt on the other hand means that that debt is secured using some of your assets such as your car or your home. In the event you default on your payments, the lender can easily repossess the asset that was used to secure the loan.
Some of the debts that can be consolidated include;
Credit cards
If you have several credit cards, you’ve probably noticed that it can be very easy to fall behind in payments. Every time you get late in making payments, interest builds up and before you know it, you are obliged to pay a huge sum of money to clear the credit card balances, the interests, and the penalties.
Consolidating some of your payments into one payment can help you stay on top of things and avoid accruing interest every month.
Store cards
Nowadays many stores have introduced the buy now pay later strategy for customers who want to buy items that are way out of their current budget. Opening a store card account to buy items on debt and pay when your salary hits your account can be tempting. But, sometimes the interest you will be required to pay can be quite hefty.
You must be disciplined and learn how to manage your store card effectively. Debt consolidation can come in handy in this situation.
Unsecured Personal Loans
Unsecured personal loans can also be consolidated. If you have several credit cards and a personal loan, you may consider absorbing all these loans into a new personal loan. If you choose to do this, you may end up paying less interest rates as compared to when you have to pay all your debts separately. However, before you decide to take up more debt, take time to weigh all your options. You can take up a new loan and end up paying hefty interest rates. Talk to your lenders and be sure to read all the terms and conditions and seek clarifications on rates before you make a decision.
Other debts that can be consolidated include medical bills, utility bills, phone bills, and personal lines of credit. You also need to know that not all debts are created equal. This means that some debts cannot be consolidated. They include lawsuits, government loans, tax debts, and home loans among others.
What Are Debt Consolidation Loans?
Debt consolidation loans are personal loans that integrate high-interest debts into one so that you are able to make one fixed payment every month. The good thing with debt consolidation is that it gives you a chance to pay fewer interests and by doing so, you can get out of debt faster.
How Can You Access A Debt Consolidation Loan?
Well, you will need to identify a debt consolidation loan lender. Debt consolidation companies offer personal loans for debt consolidation. These loans can be used to fund debt consolidation but you can also use them for relocation, medical procedures, and home makeovers. To pick the right lender, you must consider several factors such as fees, loan amounts, the terms of repayment, and your credit score requirements. Remember, there are so many debt consolidation companies in the market today and that is why you must evaluate each lender before making a decision.
Create a list of all your debts and determine how much time you need to clear the loan. Research your options and see if you can get lower rates than what you are paying. Figure out how much money you can raise every month to pay your debts before taking out a debt consolidation loan. Finally, make the right choice. Debt consolidation loans are not for everyone, look out for scams, red flags, and customer complaints. If you suspect foul play, tread carefully before making any payments.