Posts Tagged ‘credit card debt consolidation loans’

What Are The Options Available For Credit Card Debt Consolidation Loans?

If you are looking out for credit card debt consolidation loans so that you can easily deal with the mountain of debts acquired through different credit card accounts, you will be glad to know that your options abound. Today, there are many companies in the market that offer a wide array of services to consolidate such debts. However, there are certain eligibility criteria that you must meet in order to qualify for those programs. The qualifying requirements may vary significantly from one consolidator to another. It is also important to note that not all companies or all types of consolidation programs can make the right fit for you. In order to make an informed decision, you must first do a thorough research. Following is a brief rundown on some of the options you can try in this regard and how to go about the same.

Transferring Your Multiple Debts To A Single Low-Rate Unsecured Loan

Unsecured credit card debt consolidation loans are the ones that allow you to borrow a new loan without requiring you to put any collateral. When you receive the money using this loan, you can easily pay off all your credit card debts in one go. This way, you will be left with just one unsecured loan, which means just one monthly payment. These loans allow you to make the repayment in small monthly installments over a certain period of time.

Transferring Your Debts To A Single Secured Loan

You can qualify for a lower-rate loan and thus can save a lot of money by choosing to go for secured credit card debt consolidation loans. But, there are certain risks also associated with this option. As the name suggests, these are secured loans, which means they require you to put your property as collateral against the money you are borrowing. For example, if you have some equity in your home, you can use the same as collateral. You will have a very serious financial responsibility on your shoulders, the responsibility to make timely payments toward this new loan. Due to any reason, if you start making defaults for several months, you are very much likely to lose your home in foreclosure. The debt consolidator in such cases will go ahead and sell off your home in order to recover their money.

Hiring An Agency To Manage Your Debts

However, it is also important for you to keep in mind that the concept of credit card debt consolidation loans does not always require you to borrow a new loan. You also have an option to hire the agency just to manage your credit card debts. This way, you will have your credit card debt accounts in tact; it is just that the agency will then be handling the debts on your behalf. You will make a single consolidated monthly payment to them and they will further disburse the payments to your respective creditors. The agency also negotiates better repayment plan with your creditors and convinces them to write off penalty charges and reduce interest rates.

Overall, as you can see, there can be an array of option when it comes to using credit card debt consolidation loans.

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What are the pros and cons of debt consolidation?