How to Pay Your Debts Through Debt Consolidation
Debt Consolidation Solving the issue of debt can seem like an impossibility. Teach yourself about debt consolidation options and concepts to ensure a promising financial tomorrow.
Be Debt Free With These Debt Consolidation Tips
Look Through FTC Regulations Read about things like debt relief and negotiation companies to give you some background you need to go forward with the process of debt consolidation.
Do Your Research â—? Don't borrow money from a company you haven't researched and especially from loan sharks. â—? Borrow money from someone with a strong reputation, offers a fair interest rate and has easily understandable repayment terms.
Consolidate â—?
Consider which debts you want to consolidate, and which debts you want to keep out.
eg. It makes little sense to consolidate loans with zero percent interest onto higher interest loans. â—?
Walk through each loan you currently have with your lender to make sure you are making smart decisions.
Debt Management Plans ● ● ●
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Preferred method of debt consolidation. Starts with credit counselling session. Help you get a lower interest rate from creditors and reduce or waive late fees to help make your monthly payment affordable. You send one payment to the agency running the DMP and they split it among all your creditors. Can possibly affect your credit score. Longer process and can take 3 to 5 years.
Secured vs. Unsecured Consolidation Loan ● ●
Choose between a secured or unsecured consolidation loan. Secured Debt Consolidation Loan pros and cons:
+ Easier to obtain from a lender + Higher borrowing amount allotted + Lower interest rate + Possible tax deductible interest rate – Longer repayment terms (higher cost in interest over time) – Risk of losing assets
Secured vs. Unsecured Consolidation Loan ●
Unsecured Debt Consolidation pros and cons:
+ No asset risk + Shorter repayment term (lower cost in interest over time) – Harder to obtain from a lender (high risk borrower) – Lower borrowing amount allotted – Higher interest rate – No tax benefit
Use a Lifeline â—? Loan from your life insurance to help pay your debts. â—? Pay this money back so that funeral expenses are covered.
Pay in Cash ● ● ●
Stop using your credit cards and pay in cash. Set aside a portion of your income to pay down balances on your card. When everything is paid be more responsible on your credit usage so you don’t get mired in debt again.
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