Are you wondering if debt consolidation will be helpful for your current financial situation? You probably know the term, but not what it offers you. This article will get you started in the right direction. The information in this article will assist you in consolidating your debts. Here you will find solid information to assist you in this important decision making process.
Do you currently hold a life insurance policy? Cashing in your policy will allow you to get out of debt. Talk to a life insurance agent in order to discover how much money you could get from your policy. It may help you reduce your debt to a more manageable level.
Credit Cards
Many credit cards will negotiate a lower rate to keep you as a customer, but you have to ask them for it. Many creditors work with debtors because it’s better for them to get some amount of payment than nothing at all. If you have credit cards and the monthly payments are too high, speak with the companies involved to negotiate a lower rate. Many times these companies are willing to work with you because they would rather get some money than lose it all.
If you get an offer in the mail for a credit card with a low rate, think about consolidating your debts with this offer. You will not only save interest, but you will also be left with only one payment. Once you’ve consolidated your debt onto one card, focus on completely paying it off prior to the expiration of the introductory interest rate.
If you’ve got a home, you should consider refinancing it and taking that cash to eliminate your debt. With mortgage rates being so low, it’s a great time to pay off your other debts. Additionally, your mortgage payment may be lower than what it originally was.
Call your creditors and ask if you can negotiate lower interest. Often creditors will accept a lower payout than the amount owed, if you pay in cash and pay the entire amount off. Your credit score won’t go down when you use this method either.
Credit Score
Applying for a consolidation loan will not impact your credit score. Other debt consolidation strategies can negatively impact your credit score, but consolidation loans are designed to help you get lower interest on your debt and help to make one large payment. It can work well, provided you make timely payments.
You might access your retirement funds to repay high interest debts. This shouldn’t be done unless you’re sure that this money can be paid back into your account. If you don’t, you will pay huge fees.
Assess which debts should be consolidated and which ones are better left alone. For instance, zero-percent interest rate loans should usually not be consolidated with a loan that is higher interest. Go over each loan separately and ask the lender to help you make a wise decision.
Find out if the debt consolidators you’re using are certified counselors. You can find certified counselors and companies at the NFCC. This way you can have peace of mind knowing that you’re making the right decision and the people are there to help.
An effective method of consolidating your debt is simply taking out a loan from a friend or family member. Before you do so, however, carefully consider the impact that such a loan could have on your friendship, particularly if you run into trouble paying it back. This is a way to actually pay down debt, but it really ought to be a last resort. Only go down this road if you know how and when you can pay them back.
Debt consolidation should now be something you’re more comfortable with. Do your research and go into the situation with your eyes wide open. Doing so will put your finances in better order, which in turn, will make your life better.
