Which Debt Consolidation Loan is Best For Me?

Which Debt Consolidation Loan is Best For Me?

Taking the first step in controlling your situation is recognizing that what you are currently doing is no longer working. Making minimum payments to several loan companies leaves you paying more interest than principal and you will remain forever in debt. Debt consolidation takes all of what you owe and rolls it into one, simple, manageable loan. Now you must determine which debt consolidation loan or program is best for you.

The Family Loan

No one likes to borrow money from family, but it truly is the best option if it is available to you. Yes, borrowing money from family can create some tension so be sure you can make the payments you agreed to in the payment plan. Loans from family members are the best option because there are no fees, possibly no interest rates, and you don't need to have your credit score approved. You can wipe out all of your debt and just owe one person. More importantly, you will be paying the principal of your debt not interest and fees. Just make sure you can afford to pay them back or holidays can become a little awkward.

Don't have a rich grandmother? Consider a home equity loan.

The Home Equity Loan

A home equity loan allows you to take out a loan and use the equity in your home as collateral. The amount you can take borrow with this loan depends upon the equity you have on your house and the loan to value ratio the bank is agreeable to. Home equity loans traditionally have lower interest rates than most loans and typically have other government benefits.

If you take out a home equity loan for debt consolidation you will pay your current debts from the home equity loan. While you will still owe the same amount you will be paying fewer fees and interest, and you will have one payment. Seems a little bit more manageable? I couldn't agree more.

What if you don't own a home or if you don't have any equity in your property? Try to get approved for a debt consolidation loan.

A Debt Consolidation Loan

A debt consolidation loan may be harder to get than a home equity loan. This arrangements involves an unsecured loan so you may also have a higher interest rate then you would for a home equity loan. You may also have to do more to prove to the bank that you are worthy of such a loan. Be prepared to show a budget and other money management skills to gain approval.

There is still a benefit to a debt consolidation loan. The debt consolidation loan will consolidate your debt into something more manageable. You will be able to pay off your currents debts with this loan and have one payment instead of several. The one payment will be higher than any single payment you made before so make sure you can afford it. You still want to avoid bankruptcy so make sure that whichever debt consolidation loan is arranged for you is affordable.

Now that you know which tools are available to help you with your debt consolidation be sure to stay out of debt in the future. Don't be tempted to start using your credit cards again once they are at a zero balance, also, don't take out new loans. Create a budget and stick to it.

In addition to watching your spending be sure to save. Creating a savings account is very important because in an emergency you won't have to turn towards credit cards to help yourself out. Whatever reason motivates you to save, do it; pay yourself in addition to your debt consolidation loan.

POST COMMENT

Debt Consolidation Alternatives – Consider the Option in Multiple Problems Avail Debt Consolidation Loans to make the impossible possible Debt Consolidation Plan – How To Make The Best Plan For Debt Consolidation Debit Consolidation - Is Debt Consolidation the Right Solution For My Financial Situation? Debt Consolidation Relief – Does This Option Make Sense For You? Debt Consolidation - How Debt Consolidation Can Help You Long Term Debt Consolidation Agencies – How They Work Debt Consolidation - How Debt Consolidation Can Save You A Lot of Money Debt Consolidation – Lower Payments For An Easier Payback Debt Consolidation Loans – A Realistic Option To Become Debt Free Debt Relief Options - How Debt Consolidation Can Help You Debt Consolidation Loans – How This Debt Relief Option Works Debt Consolidation Advice