Debt consolidation: If you experience difficulties in stabilising your earnings and expenses due to heavy debts then find your choices in credit card debt consolidation. Debt consolidation can be an exquisite choice when you perceive that your cash is becoming beyond your control. Here are 10 steps for successful debt consolidation before you sign up for a debt consolidation loan and consider various factors…
1. Why are you looking to consolidate debt?
The fundamental rule of debt consolidation is that you draw a single loan and utilize that loan to repay all your continuing credit card debts, loans and overdrafts. Usually, it culminates in lesser payments spread over a longer term. Before you perform with debt consolidation you should first think about better options.
2. Sell assets to clear your debt
Instead of rearranging your debts perceive if there is any way you can repay some or all of your debts yourself. Sell surplus valuables and other things. The thing you can sell to dealers, advertise it in local classified advertisements or through eBay. Dispose of undesired books through Amazon. If your debts are exalted and you have your own home, downsize to reveal equity.
3. Pay more than the minimum off your credit cards
If you are capable of paying more than the minimum monthly charges you should gravely ponder whether to continue with your present credit cards and clear the debts over the next 12 to 18 months. It may restrict your expenses in other fields but it will be the cheaper choice long term. You may still choose debt consolidation to easily manage your debt.
4. Paying minimum charges
If you manage to pay the minimum monthly payments on your credit cards, or your total credit card debt is enhancing every month then debt consolidation may be the precise selection. There are various alternatives when considering debt consolidation
5. A mortgage or re-mortgage
If you possess your own dwelling, the lowest interest rates are available by getting a new mortgage to clear your existing mortgage, if any, in addition to sufficient cash to repay your other debts. If repayment of your present mortgage results in charges and a fine, try to consider a second mortgage with your present lender. The interest levied will be a bit higher.
6. Acquire a secured loan with another lender
If you have not paid or have been late in payments, resulting in your credit score being very less for your mortgage, ponder over a secured loan with another lender. Secured loans in such situations are more costly and the lenders are brisk to retrieve your home if you fail to make payments. Adopt this method only if you ascertain that you can make the repayments. Even with your bad credit record, you continue all your payments for the coming 1 to 3 years, you can reinstate this loan with a mortgage or re-mortgage when your credit score is ameliorated.
7. A loan secured on other assets
If you own a luxurious car, boat or plane you will possibly be capable of obtaining finance by utilizing these assets as a guarantee. The rate of interest will be more than a loan secured on assets. If you do not have a home or it is totally mortgaged, securing a loan on other assets may be a choice.
8. An unsecured loan
If you do not have a home or other assets an unsecured loan is feasible. An unsecured loan is generally over a shorter term, usually up to a maximum of seven years but sometimes longer. Eventually, the monthly payments will be exalted but the debt will minimize briskly. As the lender has no security, your property and assets are not at risk if you become a defaulter. The lender could only send bailiffs if they obtain an order from the court. Since there is no protection, you should anticipate paying a higher interest rate, mainly if you have a pitiable credit record.
9. Do not forget the credit card option
If your debts are comparatively low and you still have a sound credit record, requesting for another card with a 0% or low-interest balance could be an option for a debt consolidation loan. Go for a 0% balance transfer if you can reasonably repay all or most of the debts in the 0% balance transfer term. If there is still a considerable debt at the end of the balance transfer time, endeavour for a fixed interest rate. Beware if there is a 2 – 3 per cent charge on the balance transfer. To ensure you do not get back into debt clear all your credit cards and finish paid-off accounts.
10. Check all the options before making a decision
When you explore all choices, it will at once become vivid if there is one clear solution. For several persons, there will be more than one choice so it is necessary to examine them before making an ultimate decision. Proceed to different lenders and mortgage or loan agents and procure the best package for you.
Tell me if you know more about any successful steps for debt consolidation and we will add them to this post!