How To Get A Debt Consolidation Loan

Many ways can be chosen to facilitate debt repayment, one of which is by consolidation. Debt consolidation can make it easier for someone to pay off debt. The question is how to get a debt consolidation loan.

Photo: debt.ca

By getting a debt consolidation loan, debt can be more easily repaid which can be done with various types or methods used.

How Do You Get A Debt Consolidation Loan?

This debt consolidation is not a solution to pay off your debts, it's just that if applied to the financial problems of people who owe a lot, this can help expedite debt payments.

Consolidation itself means merging. In terms of debt consolidation, it means combining several large loans, into a single loan.

With consolidation, it is possible for people with a lot of debt, to combine them into one larger loan with a low-interest rate.

Even better, if the loan submitted is quite a lot, then the interest rate determined can be relatively low. By consolidating debt, it means that all debt will become a single debt and will make it easier to manage transactions through monthly payments.

Reporting from The Balance, several methods can be used to consolidate debt.

The options may be limited depending on the type of debt, credit status, and any real estate assets a person owns.

1. Transfer Credit Card Balance

Credit cards with high credit limits and promotional interest rates on balance transfers are good candidates for combining credit card balances with other high-interest rates into one account.

Combining balances under an interest rate lower than the average rate of existing balances allows one to save money on interest and pay for one credit card instead of several.

Balance transfers usually don't count toward the cash bonuses, points, or introductory miles the card offers.

2. Debt Consolidation Loan

Lenders often offer "debt consolidation" loans that tend to be unsecured personal loans specifically designed to pay off debt.

Debt consolidation loans usually have a fixed interest rate and repayment period for a more stable repayment term.

3. Student Loan Consolidation

This loan is specifically to consolidate multiple student loan balances into one loan with a single monthly payment.

This can be beneficial if you have multiple student loans with different services. This loan consolidation is available for both private and federal loans.

4. Home Equity Loans and Credit Lines

Home equity loans and lines of credit typically allow a person to borrow up to 80% to 85% of his or her home equity. The loan option makes it possible to take a certain amount of money paid through fixed payments over a certain period.

A home equity line of credit (HELOC) is similar to a credit card in that a person has access to money whenever he needs it and only pays interest on the money borrowed.

Be warned, payment of a series of fees needs to be made to complete the HELOC. Then the money from the loan or line of credit will be taken and paid off existing debts, whether credit cards, personal loans, or other borrowed money.

Home equity loans and lines of credit require using the home as collateral. If not paying the loan or credit line back, a person could lose the home due to foreclosure.

5. Cash Mortgage Refinance

Cash refinance is a type of mortgage refinance in which you will get a new mortgage that exceeds the amount owed on the first mortgage.

A new mortgage pays off the old one and can pocket the difference through cash. This money can be used to pay off existing debts, assuming what is agreed to cover credit card balances and loans.

That's a little information about "how to get a debt consolidation loan". Hope it is useful.

Share