Do you have debts? You are not alone and you are certainly not alone in seeking relief. The average adult with a credit card has a debt of $ 5,839, according to. In addition, 38% of US households have a revolving debt each month because they are unable or unwilling to pay their balances.
These figures may not surprise you and will even offer you some comfort, knowing that there are other similar struggles. However, even relatively modest debts can affect your life and make your financial future more difficult.
So, what are your best options to help you gradually get out of the stress of debt?
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If multiple balances annoy you, combining them into one low-rate loan can help you find a simpler solution to debt relief.
A debt consolidation loan allows you to combine several high interest rate debts into a single new loan, ideally with a lower interest rate and better terms. With fewer payments paid each month on interest, you can pay off your debt faster and save money.
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The Best Debt Consolidation Loan Companies For 2019
We will look in more detail at each company, explaining why each of them offers the best online loans for debt consolidation. In the end, you will understand what debt consolidation is, the different types of debt consolidation loans, where to find debt consolidation loans, alternatives to debt consolidation and how to avoid scams.
What is debt consolidation?
Think of all the debts and credit card balances you currently have. Imagine if you could bundle them into a new fixed rate loan and pay them with a single monthly bill? In simple terms, this is what debt consolidation is.
Debt consolidation combines high-interest rate debt – such as credit card balances, personal loans and medical bills – into one low-rate loan with a monthly payment. It’s a way for consumers to simplify their obligations and reorder multiple invoices with different interest rates, payments or maturities.
There are a number of ways to consolidate debt, such as applying for a loan or contracting a debt consolidation loan.
Compare Debt Consolidation Companies and Apply Online
Use the loan comparison tool below to view several debt consolidation loan options without obligation. Simply enter the subject of the loan, the amount you need, your estimated credit score and the state in which you reside to instantly consult the available loan companies to accept your application online now.
Although it is not as radical as debt consolidation comes with its own set of potential pitfalls. As with anything else, it is best to weigh the pros and cons and decide if it suits you.
Advantages of debt consolidation loans
- Short Term Relief: A single low-interest loan, spread over a long period of time, can significantly reduce the amount you pay each month.
- It’s easier to stay organized: It can be difficult to track multiple invoices and monthly due dates, resulting in more late or missed payments, but it’s easy to remember to pay only one bill .
- No damage to your credit: Debt consolidation keeps your credit intact, since you always pay everything you need. And, in fact, credit rating models tend to see.
Disadvantages of debt consolidation loans
- Long-Term Pain: Your lower monthly payment is usually the result of a longer payment period, not just a lower interest rate. This means that you will spend more time paying for it.
- Big risks, depending on your new loan: Guaranteed loans are covered by a guarantee that could make you lose if you default. Unsecured loans will affect your credit score if you default.
- You are fighting debt with debt: Although debt consolidation can work for financially disciplined people, bad habits may be the reason you are considering consolidation, and a new loan will not solve this problem.
Debt consolidation is aptly named. When you consolidate your debts, you take out a new loan, more importantly, to repay a portion of your existing debts to a single creditor. Your monthly payment will likely be lower with the new loan. Unlike debt settlement, you do not actually reduce the capital you owe; you will always pay the full amount.
But debt consolidation is not risk-free. Experts warn you against consolidation unless you really have trouble making the minimum payment of your debts each month and you are ready to change pages with your consumption habits.
What type of debt consolidation loan is there?
Guaranteed consolidation loans are linked to some kind of collateral – a valuable asset that the lender can acquire if you no longer pay your bills such as your home or car. It is easier to qualify for a secured loan because the lender is less risky. For the same reason, it is also easier to get a higher amount at a lower interest rate. In some cases, interest may also be tax-deductible.
Although it is easier for you to get this type of loan, you could also lose your assets in the event of default and repay it much longer. Home equity loans are among the most common type of secured debt consolidation loans.
On the other hand, an unsecured consolidation loan is not linked to a guarantee. Because of this, you run less risk. In the event of a default, you are likely to damage your credit instead of your home, car or other assets. Unsecured loans generally take less time to repay.
However, getting an unsecured loan is harder, especially if your credit is tarnished. Since the lender takes more risks with unsecured loans, you will probably be offered a higher interest rate and a lower amount, and there is no tax benefit. Personal loans, credit card balance transfers and loans offered solely for debt consolidation purposes are part of your options.
Where can I get a debt consolidation loan?
- Your best bet for a secured consolidation loan will be a lender.
- You can apply to banks and credit unions.
- You can also transfer your debt to a low introductory credit card.
- Be wary of the difference between debt consolidation and debt management.
If you need a secured loan to consolidate your debts, you will probably be limited to a conventional lender, such as a bank or credit union. If you plan to take out an unsecured loan to consolidate your debt, you will have more options.
It’s hard to beat the convenience of online lenders, we’ll see some of them below. You can also apply for a personal loan at most banks and local credit unions. Although the loan process can move slowly, you can get a more personalized service this way.
Also, note that transferring your debts to one can be a smart option. Just make sure you can pay it back before your launch rate expires and it leaves you with a higher interest rate.
Finally, it can be difficult to find a debt consolidation firm that does not secretly require debt management or debt management plans, which we will discuss in more detail later, as well as potential scams to know. The best debt consolidation companies are transparent about their services.