Debt relief is something you need to pursue when you are struggling to make the minimum monthly payment. Pursuing a debt consolidation loan is generally your best option when seeking debt relief. You have many different options when thinking about a debt consolidation loan. What are the average interest rates for the different types of debt consolidation loans?
Home Equity Debt Consolidation Loan Interest Rates
A common form of debt consolidation is to take out a home equity loan. These loans are designed for borrowers who have a large portion of their homes already paid off. Most lenders will not make a loan unless 60-70 percent of the home is paid off.
Borrowers with good credit will see interest rates comparable to what a first mortgage currently goes for. Current mortgage rates are roughly 4 percent. However, borrowers with less than stellar credit scores may have to pay 5-6 percent interest depending on the lender.
For example, a borrower with a credit score of 720 would pay roughly 4 percent interest. A $10,000 equity loan would cost $400 in that first year. Borrowers with a credit score between 650-720 would pay $500 or $600 in interest.
Personal Loan Interest Rates
Personal loans are available for those who are looking for a loan without collateral. Personal loans are perfect for borrowers who have poor credit. Interest rates for a personal loan depend largely on the amount of the loan.
If you need a $10,000 loan, you may be asked to pay around 15 percent interest. Some personal loan lenders will charge you as much as 35 percent interest depending on credit score and loan amount.
Your best chance to get a good rate with a personal loan is to shop around. Consider the cost of paying off a $10,000 debt at 35 percent interest compared to 15 percent interest.
You will pay $3,500 interest a year with a 35 percent interest rate. This is reduced to $1,500 a year if you only have to pay 15 percent interest. You can see how significant your savings is when you get the best rate.
Unsecured Debt Consolidation Loans
Borrowers with good credit can get unsecured consolidation loans with much better interest rates. Unsecured consolidation loans used to be popular before the Great Recession.
Getting these types of loans is much harder now. However, a qualified borrower can get an unsecured loan for as little as 6 percent interest. This is a very good rate for an unsecured loan.
Another idea to get a better rate on an unsecured loan is to go to a credit union. You may find an unsecured loan with an interest rate closer to a secured equity loan. It can’t hurt to at least try. The cost of a $10,000 loan would be $600 for the first year at 6 percent interest.
Using 0% APR Balance Transfer Credit Cards For Consolidating Debt
Transferring your balance from your current credit card to another card will save you money as well. There is absolutely no need to pay 30 percent interest on your current credit debt.
Find a credit card that is offering a special introductory rate. You could wind up paying no interest at all for a period of 6-18 months. This will allow you to go from paying $3,000 a year on your $10,000 debt to nothing at all.
You can put the money you are saving into the principal balance. Doing so will continue to save you money each month. Eliminating your current debt balance will eliminate your interest payment as well.
If you have bad credit, you should know you can still get a good deal on a credit card. Taking a quick trip online will reveal many different credit card offers for people with bad credit. You could get a card with an interest rate as low as 15 percent even with poor credit.
Don’t spend your life feeling like you are a slave to debt. Getting a consolidation loan is one way to start tackling your debt. You will save money on your interest charge each month – if you can qualify. Paying more of the balance each month will eliminate your debt sooner than you think.
A Better Way Out Of Debt Without Worrying About Debt Consolidation Loan Interest Rates
Debtconsoldiation.com offers a better way out of debt that does not involve credit score requirements and does not involve applying for a new loan. Debt negotiation with your creditors can attack the heart of your debt problems – the principal balance. Call today to speak with a representative about your debt relief options.