Are you overwhelmed by debt problems? Too many bills, expenses, loan payments and credit card balances? Your debt problems can be easily solved by applying for a low interest debt consolidation loan. Replacing all your debt with a low interest debt consolidation loan has many benefits which are explained in this article.
When your debt becomes an unbearable burden, the best thing to do is replace it with cheaper debt. It may sound a bit awkward to borrow money to pay debt, but under the right circumstances, you can save thousands of dollars by doing so. And this procedure not only doesn´t affect your credit score but it actually can improve your credit situation.
Replacing Expensive Debt, With Cheaper Debt
This is the key factor to successfully consolidate debt. There are certain financial sources that, though widely available, carry high interest rates becoming expensive sources for funding. Good examples of such expensive sources of finance are: unsecured personal loans, pay day loans, credit cards, store cards, etc.
Some of the above can carry interest rates as high as 25% on an annual basis and payday loans can be even more expensive. Using these sources in the proper situations doesn´t have to be necessarily a problem to your credit. However, when debt accumulates, a swift solution has to be found or you may have to face bankruptcy.
Since debt consolidation loans are meant to be used to cancel outstanding debt, the interest rate charged for such loans tends to be significantly lower than the average rate of the outstanding debt. If you can provide some sort of collateral you´ll be able to get even cheaper finance.
However, since the whole idea of a consolidation loan is to reduce your monthly payments, make sure that the interest rate charged for the consolidation loan is lower than the average interest rate of the debt you´ll be consolidating. Otherwise, in order to get lower installments you´ll have to apply for a loan with a longer repayment program.
What Debt Should Be Consolidated?
Not all debt should and can be consolidated. Some loans, due to their secured nature, cannot be consolidated with an unsecured loan and even if possible, the interest rate would turn such financial transaction into a ridiculous idea.
As a general guideline, any debt with a lower interest rate than the new debt consolidation loan should be left...
Learn more here: http://www.opportunityiowa.org/debt-consolidation/debt-consolidation-loanssolve-your-problems.html
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