Debt Consolidation allows you to pay off debt quicker and for less. You consolidate debt by taking a loan to pay off multiple loans. This allows you to simplify the loan payments and lower the monthly installment and total cost of the debt if your consolidation loan has a lower interest rate than the original loans.
As millions of American consumers continue to struggle with debt and fees related to debt, finding legitimate debt solutions and debt help becomes harder and harder. Debt Consolidation can be a wonderful solution to those folks who are paying an arm and a leg due to those high-interest rates from credit cards and other consumer loans.
What is Debt Consolidation?
Debt consolidation is a form of debt help that allows consumers to save on interest and debt expenses by paying off existing financial obligations with funds from a debt consolidation loan.
The idea is that by borrowing with a comparatively low-cost loan you can pay off higher cost debt with those funds and thus save on the interest and other costs you would have normally had to pay without the debt consolidation loan.
Debt consolidation is typically activity relating to refinancing high-interest debt to a loan with lower interest rates and or fees. For example, if one has a credit card with 10,000 dollars on it at an interest rate of 30% that person may go to a bank or other lender and apply for a consolidation loan at a lower interest rate. If approved the idea is to pay off the credit card with the money obtained from the new loan and thus the consumer saves money from the lower interest.
The problem with debt consolidation is obtaining a low-interest loan in the first place. Many folks who would like to obtain a debt consolidation loan and pay off credit cards or other forms of high-interest loans don’t qualify for a loan or a loan with an interest rate low enough to make a difference in the first place. If this is the case the consumer will have to look into other forms of debt help or simply stick with the high-interest rates.
Consumers have many debt help options available to them besides debt consolidation
Debt settlement and other forms of debt solutions can help consumers restore financial health and may be part of the debt help they need to overcome financial hardship and work towards a life of financial freedom.
Debt Consolidation Loan Funding
You may be thinking that this whole concept of debt consolidation sounds great and most likely would be great but perhaps finding the funding for a debt consolidation loan may be hard for you to obtain. You may have bad credit history or other potential roadblocks that will make it hard for you to obtain a loan that is cost effective enough for you to feasibly use it as a debt consolidation loan. We have put together some financing sources that may help you solve this dilemma.
Debt Consolidation Financing Sources
You may be able to take out a home equity loan and use those funds for paying off your high-cost debt.
Mortgage Refinancing with Cash Back
Similar to the source above you could always refinance your home and take cash out of the equity you have accumulated and use this as the debt consolidation loan. This option may also allow you to lower your interest rate on your current mortgage.
Financing Against another Asset
You may have another asset of value that you can use as collateral for a debt consolidation loan. This could be a car, boat, investment, or collectible of some kind. Get creative.
Perhaps your employer would like to invest in your financial well-being. They may be willing to help you if you are suffering from a financial hardship.
Friends and Family
If friends or family have the funds to loan you a debt consolidation loan chances are they will be able to loan you money at a high enough interest that both of you will be happy.
If you have a good history with a local bank then perhaps they will be willing to finance your debt consolidation loan.
Peer to Peer Lending
There are many new lending outlets online that offer peer to peer financing platforms. Here you get to personalize your needs and have a better opportunity of obtaining the financing you need then if you were to go to a commercial online lending source.