Paying off credit card debt can be a challenge for consumers, especially when they’re working with multiple lenders. Debt consolidation allows them to combine all of their debts into one low-interest loan, which can lower payments and make it much easier to stay on top of monthly bills. Read on to find out about a few of the loans that can be used to consolidate debt below.
Home Equity Loans
There are two ways to use the equity held in a home to get out of debt. First, it’s often possible for homeowners who have found themselves in substantial debt to take out a secured loan using their homes’ equity as collateral. Readers who want lower interest rates and more flexible repayment terms can also look into equity release.
Those who have a handful of different credit cards that all need to be paid off may be able to take out a new card and consolidate the balance through this single creditor. Choosing a card that offers low interest rates is extremely important, as this will ensure that readers are able to take advantage of monetary savings in addition to simplifying the process of paying monthly bills. Many cards offer 0% interest rates during introductory periods as well, which allows consumers to put all of the money they are using to pay off their cards toward their principal balances instead of interest.
Personal loans are usually unsecured loans, which means there’s no need to put up collateral. This makes them accessible to a wider consumer base. It’s important to note that those whose credit scores have been substantially affected by unpaid debts or late payments may have to pay steep interest rates or may not even qualify for personal loans that are large enough to cover all of their debts.
Consult a Financial Advisor
Still confused about options or concerned about eligibility due to a low credit score? Consumers who have found themselves feeling overwhelmed by debts should know they don’t have to go it alone. Readers can consult a financial advisor for personalized advice or get info about their options online.