Get Out Of Debt

Eliminate your debts on credit cards, personal loans,
medical bills, and more with debt consolidation.

 

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Debt Consolidation

 

3 Ways to Make Life Easier by Consolidating Your Debt

Debt consolidation loans are designed to assist people with debt.
All existing loans are combined or “consolidated” into a single loan.

 

Debt consolidation can help you with your debts in 3 ways:

 

1. Consolidating debts into a single loan simplifies debt analysis, monitoring and repayments.

 

2. Consolidation often results in a lower interest rate and
reduced debt repayments.

 

3. Lower debt repayments enable quicker repayments.

 

Note: It is important to ensure the consolidation loan satisfies your requirements. Professional planning is necessary to achieve
the most optimal loan arrangement. There are various
consolidation loans available, each offering different interest
rates and repayment terms. Interest rates could be higher
and repayment terms longer if the loan is not effectively
managed. Late payments also lead to a higher interest rate
and increased repayments.

 

Credit Card Debt

The most common form of personal debt is credit card debt. 

Debt consolidation enables people who are having difficulty paying debts on multiple credit cards to convert these debts into one
consolidated loan. This has the effect of simplifying the payment
process, requiring only one monthly payment to a single source.
It may also reduce the amount of collection calls from creditors,
and can be a method of improving your credit score as timely
payments are made.

 

Secured and Unsecured Consolidation Loans

‘Secured’ and ‘unsecured’ describes the two main types of consolidation loans.

 

Secured loans

Secured loans provide collateral to creditors (in the form of personal assets such as your house, car, and other assets) if you default on your loan.

Due to the high level of protection granted to lenders/creditors (from collateral) they should be more willing to lend, and prepared to offer
more favorable terms:

 

* Greater borrowing amounts
* Lower interest rates
* More flexibility in repayment terms
* Possible tax deductions on interest rates

 

However, this may be offset by longer repayment terms with greater interest payments over time, and the risk of losing personal assets.

 

Unsecured loans

Unsecured loans offer no collateral to creditors. Repayment terms are based predominantly on your credit history, as unsecured loans are
high-risk for a lender.

This benefits the borrower in the following ways:

 

* No personal asset risk
* Shorter repayment term (lower interest costs over time)

 

However, it comes with the following drawbacks:

 

* More difficult to obtain from a lender (high risk borrower)
* Lower borrowing amounts
* Higher interest rates
* No tax benefits

 

What to Consider with Debt Consolidation

 

There are various debt consolidation methods and strategies to be consider.

 

Loan Extensions

Increasing the loan period may reduce the monthly payment and
possibly the interest rate, however, there may be more interest to
pay in the long-term.

 

Spending Habits

Debt consolidation does not guarantee your debt will be eliminated. Controlling the amount you spend and save is critical to ensure your
debt does not increase, and is successfully paid off. Keeping old
credit cards stored away and not applying for new ones should help
to curb spending habits.

 

Home Equity Loans and Line of Credit

Home equity loans and line of credit may be an effective way of consolidating debt. They provide low interest rates and deductible
interest for taxpayers who itemize their deductions, BUT your home
is put at risk if the required payments are not met. Risking the home
to pay off credit card debt does not make sense.

Debt Relief offers a way to help resolve debt problems in a way that
better meets your current circumstances. This may result in a lower
interest rate and faster debt repayment.

 

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