Saving Money With These Debt Consolidation Tips
Debt consolidation is a powerful tool that can help you overcome your debt struggles. Having to live with the burden of crushing debt can have negative consequences on the rest of your life. Suffering from stress due to debt can cause health problems. Getting rid of your debt can be very beneficial to all facets of your life. What are some things you should know about debt consolidation?
Your Creditors Will Resist Your Overtures At First
Your creditors have the legal right to collect all money that is owed to them. However, you have the right to declare bankruptcy to escape your debts. This means that your creditors risk losing everything if they are not willing to accept a debt settlement.
Don’t be surprised if your creditors do not accept the first settlement offer you make them. They are simply trying to play hard ball with you. You should be able to get your creditors to accept a deal that allows you to cut your balance by as much as half. Debts that have been turned over to collection agencies could be settled for as little as a quarter of the balance.
Use Your Good Credit To Get The Lowest Debt Consolidation Loan Interest Rate
Just because you have a lot of debt does not mean you have a low credit score. Plenty of people are able to scrape by making the minimum payment each month. Although Time shares that it is important to always pay off your credit card bill in full. Having a good credit score will help you qualify for plenty of low interest consolidation loans. Consolidating debt should always result in you paying a lower interest rate. What are your best options to consolidate debt if you have good credit?
Find a credit card that has a low interest rate. Transfer all of your existing balances to the new credit card you have just opened. You have just consolidated your debt in a couple of easy steps. The only fee you have to worry about is a balance transfer fee.
-Home Equity Loan
Use the equity in your home to finance your debt consolidation loan. Equity loans have low interest rates for qualified borrowers because the loan is secured with your home. Collateral will always give you a better interest rate on a loan.
-Unsecured Debt Consolidation Loan
Unsecured loans require nothing more than a good credit score to get a loan. This type of loan can be a good way for borrowers who don’t own a home to get a loan. The rates for this type of loan are usually lower because your good credit makes you less of a credit risk.
Avoid Credit Counseling If At All Possible
Credit counseling services will just add to the cost of your debt consolidation. There is nothing they can do that you cannot do on your own. Using a debt relief service to arrange for credit relief will have a negative impact on your credit score. The only possible upside to using a credit relief service is that your creditors are required by law to stop contacting you. Is that one upside worth the money that you are paying for this service?
Solving your debt problem will have a profound impact on the rest of your life. You will live without as much stress, your health will improve and you will have more control over your finances. Consolidating your debt can be the first step to a life that is free of debt.