Debt consolidations refers to the merger of two or more loans or mortgages into a single loan in order to decrease the amount of installments that need to be paid. Homeowners stand a better chance of availing debt consolidation solutions as they have their home equity to rely on. Home equity loans, line of credit, or refinancing your existing mortgage are three of the popular methods that can be used to reduce debts. This does not mean that non-homeowners do not have the privilege of securing a loan consolidation. Some of the ways in which non-homeowners can consolidate their debts are listed below.
Credit Card Balance Transfer
This is where your credit card usage will help you in getting your loan repayment solutions via debt consolidation. If you have a good credit rating, then you would have an upper hand when you call your credit card company for interest rate quotes. This interest rate enquiry would be pertaining to the interest that would be charged by the company in case you transfer your other card balances to them. Chances are that they might give you better rates considering your credit standing. This method brings together all your different credit card debts under one banner and results in lower payments. Most importantly, you have to deal with just one rate of interest, which makes repayment less taxing.
However, non-homeowners who opt for this method should undertake precautionary measures regarding certain terms and conditions put forth by the credit card company in which you are consolidating your balances. Firstly, check the (Annual Percentage Rate) APR, the interest rate and its type, whether it is fixed or variable. At times, the company may offer low introductory APR and then raise it once the preliminary period is over. In addition to that, you need to be sure about the introductory rate is same for the transfer as well as the current balances. Check the duration of the zero or low APR; in case it lasts until the time you are able to pay the debt, then it is most beneficial even if you have to incur a higher interest rate.
Withdrawal from insurance policy
Your insurance policy is another route to freedom from the debt burden. The amount you can borrow from your policy depends on the duration of the insurance cover and the principle amount. However, care should be taken when calculating the numbers and rates involving the payment of premium and restoring the loan.
Secured Personal Loan
Keeping your personal belongings as collateral and getting yourself a loan to pay off several others that are pending since long is a another means to set your debt problems straight. However, this approach would only benefit those who have substantial personal belongings, which have considerable value when they are considered as collaterals.
Debt Settlement Companies
These companies are specifically set up for helping out individuals who are in need of debt consolidation. They act as mediators between the borrowers and their creditors and negotiate with them to reduce the interest rates on your debt. The debt companies usually have a good rapport with most of the creditors and in addition to that, their market standing gives them the edge to bargain and tip the deal over to the borrowers benefit. They can get your debts reduced by up to 50% to 70%.
Non-Profit Consumer Debt Management Programs
This should be a last resort to consolidate your debts. Debt management programs can provide the borrowers with an agreement with their creditors to give you certain waivers such as late fee, reduced interest rates, extension of repayment period and much more. These non-profit consumer programs have a good market standing and hence are able to get the acceptance of the creditors without much ado.