If you are looking for a way out of a mountain of debt and you are looking at your options then you might want to consider what the best ways to consolidate debt are. Finding a consolidation loan that can save you money each month will relieve the stress that being in debt can cause.
What You Are Looking For
If you are looking for a consolidation loan you need to consider the options that make the loan worthwhile.
- Lower monthly payments
- Lower overall amount payable
- Lower interest rates
It is important that you consider all the options that are open to you and work out if the loan is going to save you money, there is the possibility that the loan might cost you more long term and this is not going to make your life any easier.
Using a Credit Card to Consolidate Debt
You are looking for fixed rates over a set period of time, there are often great deals on 0% APR and these are fine but work out the price of the transfer, often included in these deals is a fixed price for transferring the debt and sometimes this can be just as expensive as a low interest rate fixed term balance transfer. So, it is important to do your sums and work out the best deal for you.
You might be able to get a great deal from your current credit card provider, tell them if they aren’t prepared to offer a good deal you will take your business elsewhere. This will give you the best deal and the best way to consolidate your debt.
It is important that you look at your debt and work out a plan to become debt free in x about of years; ideally you are looking for it to be between 3 – 5 years. Be cautious with the amount of credit applications that you fill in and apply for because it will do more harm than good to your credit file.
Borrow Against Your Home
It is possible that the best way to consolidate your debt is to borrow against your home. This might be the cheapest way to secure a loan because there is something that the loan company has an agreement, if you fail to pay the debt then your home will be repossessed.
The amount that you will be able to borrow will depend on a number of factors, the amount of money that you currently owe on your mortgage, the value of your property and the equity that is available. This is the difference between these two figures; it is this equity that you will be borrowing against. If you don’t have any of this equity it is very unlikely that you will be able to borrow against your property.
But if you are able to use your home to secure a consolidation loan then you need to make sure that it is at a great rate, this might be the best way to consolidate your debt.
Using Credit Counselling
If you are struggling to understand the complexity of your situation and you know that you need help then the best way to consolidate your debt is to ask for professional help.
A credit counsellor will look at your financial situation and work out what your best options are, they might suggestion you try a debt management program and this will involve paying the debt management company a payment each month and they use this money to pay off your creditors. Many times a debt management company are able to secure a reduction in the amount of interest that you are paying and this will mean that you will become debt free quicker.
You must remember the effect that some schemes can have on your credit file, being enrolled with a debt management company will show on your credit file and this can have an implication on some credit companies, they can increase the interest rates that they offer or refuse you credit.
Choose Your Company Carefully
If you are looking for the best way to consolidate your debt and you choose a company you will need to make sure that the company that you pick has a reliable reputation because if they make a late payment to your creditors then it will not be their credit file they will be damaging but your own.
It is possible for you to do the hard work and plan to pay off your debt yourself, but you will need to be focused and have a plan, it is important that you just start the plan now, there is never going to be the perfect time for sorting out your debt something will always get in the way and it is important that you consider your options and make the changes now.