Debt Management

4 Key Types of Debt Consolidation Loans to Choose From

If you have a lot of debt weighing down on you, you have several options for debt relief that can help you find financial freedom. Debt relief is amongst the better options that you have to get rid of your debt because it allows you to make manageable monthly payments at better rates than all the individual debts combined.

The different types of debt consolidation that you can choose from include the following:

  1. Personal Loan

By taking a personal loan that can cover all your debts, you can more manageably pay for all your original debts and remain with a single loan that you can pay off with more friendly terms.

Depending on your credit rating, a financial institution can give you quite attractive rates that may be better than your combined individual loans.

  1. Home Equity Loans

A home equity loan is an attractive option for debt consolidation because the loan usually has very low interest rates and its payment is over a very long period. With a home equity loan, the limit and basis for the loan is the value of your home.

The idea is to take a low interest home equity loan in order to pay off all your other debts and remain paying off just the home equity loan.

  1. Debt Consolidation Loans

You could also get a more direct debt consolidation loan from a financial institution or a debt relief company for the sole purpose of consolidating your loans.

  1. Credit Card consolidation

Credit card consolidation involves transferring debt balances from several credit cards to a single credit card that offers better terms.

Credit cards with interest rates as low as 0%, are usually promotional campaigns by credit card companies that seek new clients. These promotional rates are usually for a relatively short period.

If you are to use this option in order to consolidate your debt, you should make sure that you take note of the period when the promotion ends and when normal interest rates will take effect. You should also confirm if the limit of the promotional credit card is long enough for you to hold most or all of your debt.

It is important that you are able to settle all the consolidated debts transferred to the promotional credit card on or before the time when normal interest rates take effect, otherwise you may not benefit from this form of debt consolidation.

It is imperative to note that with a debt consolidation loan, you are actually just bringing together all your loans under a single roof, so to speak, so that you can gain control of your debt by benefitting from better payment terms for the combined loans.

You will need a lot of discipline to remember that you should avoid getting into further debt while still settling your debt consolidation loan. To help you stay on course with paying your debts through a debt consolidation loan, you should find out how others have managed to stay the course through reading debt consolidation reviews. These reviews should keep you focused on achieving your goal of being free from debt.

Comments (1)

  • Great post and excellent to read! Thank you for describing all the key types of debt consolidation loan. As you told at the start that debt relief is best solution to get rid of debt. These loans you have described are in detail. All the advantages of 4 types of loan are crafted in beautiful. I feel that credit card consolidation is good as the interest rate is 0%. All These reviews should keep you focused on achieving your goal of being free from debt. Good share. I hope that I will find more such similar type of article ahead.

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