If Consolidation Is Not a Feasible Option

Consolidation is the act of applying for one loan to combine multiple debts. Borrowers usually consolidate unsecured debts such as loans and credit cards. Poor financial literacy, banking on a windfall, and medical bills are some reasons for excessive debt. Standard debt consolidation loans for non homeowners are offered by lending platforms, credit unions, and banks. Some borrowers opt for a home equity loan to pay off their credit card balances. The main benefit is that borrowers get a lower interest rate.  If a borrower defaults, the financial institution can take and sell the asset. Home equity lines of credit also offer many benefits, among which flexibility, affordable payments, and lower interest rates. This is a flexible solution that works like a credit card. In addition to debt consolidation, a HELOC can be used for emergency expenses such as car or home repairs.

wallet1Consolidation is a good option for customers with credit and charge cards. Some issuers charge annual fees, interest penalties, and other fees that make borrowing expensive. Some borrowers also choose this method because of the possibility to get deductions. Borrowers find consolidation beneficial as they pay less in taxes. This is also a good solution for borrowers with fair or poor credit.

Affordable Payments

When it comes to student loans, borrowers are allowed to consolidate private and federal loans. It is a solution for health education assistance loans, subsidized loans, and others. This option is available when you leave school or graduate. You can choose from different repayment plans after graduation. The terms vary depending on whether the borrower is married or single with children.

If you are unsure whether to consolidate or not, you can use an online calculator. You need to enter details such as credit card balances and personal, boat, and other loans. The calculator asks you to enter all outstanding balances and offers a consolidated loan and current debt analysis. For example, you have a credit card with a balance of $200, monthly payment of $30 and a 12 percent APR. Your loan balance is $5,000 at 6.5 percent. The calculator shows a summary table with your total debt balance and indicators such as interest due, total monthly payments, and proposed loan amount. If you choose to use the services of a professional instead, try to find a reputable provider.

Borrowers can choose from other options such as individual voluntary arrangement, settlement, and negotiating with financial institutions. Bankruptcy is a last resort if you exhaust all other options.