What You Need to Know about Debt Consolidation It is definitely easy to borrow money, but loans are most challenging when they are overdue. You may even find yourself on the brink of a financial breakdown before you realize that time is running out to settle them. How does one settle debts? Is there a single debt management solution for all our debts? You may have read about a wide variety of options when it comes to dealing with your debt problems. Debt consolidation is one popular option. How easy or difficult can it be? Read on. According to Wikipedia, “Debt consolidation entails taking out one loan to pay off many others.� Thought it may sound simple, it is important to remember that there are a lot of points one has to bear in mind before deciding to consolidate loans.
o
Asses your total debt.
Make an honest attempt to assess the amount of debt you owe. Calculate the gross percentage of your income that your debt represents. This is the first step in the process of consolidating your debts. o
What is your current situation?
Now that your have a sense of the numbers, make a list of missed or overdue payments. How much time do you have to pay off long pending debts? Is the situation going to worsen further? Have clear cut answers for all of these questions. Through this process, you can arrive at an approximate amount for the consolidation loan you will need to cover all or most of your debt. All the above will directly affect the debt consolidation options available to you. o
Choose an appropriate financial advisor.
With all the required information in place, appropriate research is a must before you choose the firm/individual that will help you. This decision impacts the debt management solution you are looking for. Choose the debt consolidation firm who can amicably work with you on this issue. o
Decide on the right consolidation loan or debt consolidation program.
This is a crucial step on your road to recovery from your current situation. You may find some companies who allow you to cash out extra money for personal use as well, but by now you must be wary not to borrow more than what is required to cover your debt amount. Carefully read the fine print, sit back and analyze interest rates, fees and repayment period options before you sign on the dotted line. o
Stick to the commitment and make payments on time.
After you have completed the process, make sure that your repayment schedule is stringently followed until your debts are cleared. Since most consolidation loans are backed by an asset, they are secured loans that require borrowers to be very careful with payment terms. Otherwise your attempt to help yourself out of a debt crisis could get you deeper into it instead!
Debt consolidation can most easily become your key to financial freedom; it entirely is in your hands to use the option, pay and get out of debt wisely!