Debt consolidation loans help streamline all your various bills into one. Instead of handling several vendors and keeping track of various payments each month, debt consolidation loans consolidate all such bills into one. This allows you to handle only one vendor, in this case the company offering the consolidation loan, and make only one payment each month. That single payment is paid to the consolidation company.
There Are Three Types Of Such Loans:
Home Equity Loans/Refinance: You can apply for this loan if you own a home with more than 20 percent equity and good credit rating. Usually, The Loan Interest Is Tax-Deductible.
Balance Transfer Loans: You can use this if you have multiple credit cards and a few other small debts. This combines all the debts into one low-rate/zero percent interest credit card. It’s very important to pay off this card before the low-rate expires.
Debt Consolidation Loans: In case you don’t own a home, you can apply for a personal debt consolidation loan. Though the interest is a little higher than a home loan, it’s still less than the interest on credit cards. Try for a loan with no prepayment penalty so that it can be paid off faster as your financial condition improves. Some of these loans are secured against assets that you own, for example, your car; other unsecured loans have a higher interest rate than the secured one.
The other way to get help with your bills is to apply for payday loan debt solutions. In cases of emergencies and overwhelming bills, people opt for a short-term small loan to tide them over till the next payday. These loans are disbursed quickly, within 24 hours, and are usually for a period of two weeks. The borrower secures the loan with a personal check to the lender with the amount borrowed plus a fee. If repaid quickly, these loans can be very handy as they need very little paperwork and almost no credit check is done. However, most people cannot meet the repayment within the stipulated time period and “roll over” the loan till the next payday, earning more loan fee and very soon spirals out of control. Payday loans are extremely expensive as compared to other cash loans and should be your last resort in borrowing money.
For those caught in spiraling payday loan debts, payday loan consolidation is a way out. Here too a consolidation company steps in to take care of all your payday loans. It is safer to be in a payday loan consolidation program than to handle several payday loan debts.
The federal government also runs several programs offering debt consolidation loans. Particularly for students, the Department of Education runs the Direct Consolidation Loan Program.
