One of the most popular debt solutions till date happens to be debt consolidation. It’s a rather simple process that enables you to pay off a number of debts in one go and you’ve got to make only one payment each month. This is especially beneficial if you’re struggling with multiple debt payments. Moreover, keeping a tab on several debt payments tends to take a toll on your health as well without really getting you anywhere as far as reduction in your debt burden is concerned. Read on to find out more.
The process of debt consolidation
Basically, the process of debt consolidation is nothing but the act of combining various loans and liabilities into one single loan. It can also mean the act of taking out a new loan to pay off a number of other debts. If you’re looking forward to consolidate your debts, then it’s best if you did it to attain a lower interest rate, or perhaps the hassle free dealings of a single loan.
Debt consolidation happens to be pretty common amongst individuals as well as companies. Companies which have credit card problems go forward and combine all their debts into one. This provides more ease in terms of repayment. Individuals find it advantageous for the same reason as well as for the fact that for debts like credit card, they can get the high interest rates off their back.
How to save money by consolidating debts
Consolidating debts into one monthly payment is rather beneficial, especially if you wish to negate the negative effect of debt from your life. One of the best methods of helping to alleviate the stress of debt would be to make the payment option more convenient. Debt consolidation helps you do that and it has also got the potential of saving money in terms of interest as well as fees.
1. Calculate outstanding debt: The very first thing you’ve got to do is calculate your outstanding debt. Go ahead and collect all your statements which list the secured as well as unsecured debts including your credit card debts and loans. Add them up and you’ll know the total amount that you owe.
2. Take out an equity loan: You could take out a home equity loan or a line of credit. In fact, use your home as collateral to get a secured line of credit. Try getting the best interest rate by applying at various financial institutions. It’s imperative that the loan happens to be greater or equal to your total debt amount, for that’ll enable you to make a single monthly payment.
3. Transfer balances to one card: As for your credit card balances, then try transferring all the balances to one card. There are quite a few companies which would offer no interest or low interest credit cards that are specifically meant to cater to the debt consolidation process.