Most people don’t get regular payments to deal with the debt problem. Instead, they need to cover, for example, 6 monthly debts may turn into a real disaster. Even if you choose the same due date for all the payments, it still takes much time and mental energy to control your finance.
Luckily, there is a solution created especially for this situation. You can consolidate your pesky debts and make only one monthly payment. While this is easier for your financial management, it also prevents possible mistakes, inconsistencies and late payments possible to a huge amount of debt payments.
Choosing a consolidation plan for debts can be the best decision for many debtors. You can even negotiate for lower rates for consolidating your debt and benefit paying less. Keep on reading to get more information about this financial option and decide if it’s appropriate to your particular situation.
Questions before Choosing Debt Consolidation
When you consider debt consolidation and better rates for a new consolidation loan, your main goal is to get out of debts, isn’t it? However, before you make your next financial solution, you need to think about your financial position right now. Just take your time and answer the following questions:
- How much money do you owe? It sounds strange, but it becomes not so easy to calculate the total amount of debt when you collect all the financial data you have.
- How good is your credit score? Mind that some consolidation programs may impact your credit level. That is why it’s necessary to be aware of your credit score before taking any actions. It’s not only your monthly payments that influence your credit score. So, don’t be so relaxed even if you make them in time.
- How determined are you at your decision to cover debts? While some people can really change their life to get out of debts, the others don’t even want to manage a monthly budget. So, before you begin, make sure you have enough motivation to manage your finance to become debt-free.
If you can answer these questions and still want to solve your debt problems, you should read about debt consolidation rates and other terms of this financial solution.
Possible Ways to Get a Consolidation Loan
It’s an ideal plan to get a new loan to cover all the debts you have and then repay only this new one. However, the problem is that it’s quite difficult to find such a loan, especially if you need much money. Modern banks don’t tend to offer even small unsecured loans for your debt consolidation.
The most popular way to get a consolidation loan with good rates is to apply at P2P lending service or online lending service. There are different online companies that deal with debtors who have even not so perfect credit score, so it’s worth trying.
The other option is to ask for a consolidation loan from your friends or relatives. But be sure to make a lending agreement and manage this borrowed money clever enough not to break your relationship.
When you find where to get this money, be sure to change your financial habits. Otherwise, this new loan will become the same problem you have had with several previous debts.
If you apply at a credit counseling agency and choose a DMP (Debt Management Program), you will have to make one monthly payment to this agency. Then it’ll be their work to pay each of your creditors. This program will make you debt-free in 5 years or even less.
Mind that it’s important to make this monthly payment on time, otherwise, you may fall out of this program and you will have to begin once again. Also, closing your credit cards can impact your credit score, but not as badly as you might think.
Loans against Retirement Savings
You can borrow the money for consolidation of your debts from your own savings. Use your retirement fund to get enough money to cover existing debts at once. Then you will just return money to your retirement account, paying interests actually to yourself.
The disadvantage of this strategy is that your interest rate for a debt consolidation loan will be almost the same that you pay for your credit cards. Such spending can turn you back to using a credit card when it’s not enough cash.
As you can see, there are several options for debt consolidation. It can happen to be a great option for many individuals troubled by debts and financial management. You may choose the most appropriate debt consolidation program with the lowest rates according to google suggestions.
However, be sure to remember one thing, this money is never a gift, and you will still be a debtor. But don’t be scared, your repayment process will get easier and less time consuming becoming more effective. Just try to control your money flows and you will get rid of your debts soon!