Debt consolidation can make sense if your new loan offers a better interest rate or lower payments – and you’re disciplined enough to avoid running up credit card balances again while you also have a consolidation loan to repay. If you have five credit cards with balances totalling $14,000, and you refinance them with a $14,000 home equity loan, you still owe $14,000. Unfortunately, if you have a lot of debts you may have difficulty qualifying for new credit.ĭebt consolidation doesn’t reduce the amount you owe. This could be a personal loan, home equity financing, a cash-out refinance, or a 0% balance transfer credit card. The key to debt consolidation is finding a new source of credit you can use to replace your existing debt. Debt consolidation entails taking out a new loan to pay off two or more existing loans. You may have multiple forms of debt – credit cards, student loans, car loans, a mortgage, etc. Learning about these approaches can help you make the right choice for your situation. The sections below describe several forms of debt strategies. For bigger problems, debt relief companies, credit counseling agencies, and bankruptcy lawyers offer serious solutions like debt settlement, debt management, and bankruptcy. Or you could choose to pay it off with a home equity loan to lower the payment to an affordable level. You might choose to consolidate high-interest credit card debt with a personal loan to save on interest and accelerate repayment. Debt Strategies - A Plan of Attack on Your Debtsĭebt strategies include a variety of options designed to help people with debt problems.
0 Comments
Leave a Reply. |