Questions to ask when considering debt consolidation

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You have a hard time paying your bills, especially credit card debt. You’ve heard of debt consolidation, but you don’t know what it is. Before you sign up on financial strategy, here are some questions to ask when you are considering debt consolidation.

What is debt consolidation and how does it work?

Let’s start with these basic questions. With debt consolidation, you are combining multiple debts into one personal loan, hopefully with a better interest rate than what you are currently paying in total. For example, if you have four different unsecured debts â € “ credit card balances or medical bills, for example â ???? that amount to $ 9,000, you could apply for a consolidation loan for that total. If you are approved, you can pay off those debts and pay off the new loan with a fixed monthly payment.

How much should I borrow?

You need to determine exactly how much you need from a lender. You want to be able to cover your debts, but you also don’t want extra money that you might be tempted to spend on other things.

Before you talk to a loan specialist, why not go over some numbers using a debt consolidation calculator, which can tell you roughly how much your monthly payments could be based on various APRs and loan terms.

Once you have an idea of ​​what your monthly payments might look like, you will be able to approach a lender with the confidence that comes with preparation. To see the Best Consolidated Credit Services â € “ www.freedomdebtrelief.com.

How does the process work?

A reputable lender will go through the few steps with you and make sure you understand them. Often times, you can just go to the website of the lender you’re interested in and plug in some information there, including how much you want to borrow. This is called “prequalification”,? a process that does not affect your credit since it does not require a hard credit call. Prequalification will give you an idea of ​​what you might be eligible for. After that, you can officially apply.

Why should I take out a loan instead of other options?

There are several ways to consolidate debt. Your task is to choose the right one for you. While home equity loans are known for their relatively low interest rates and longer repayment terms, for example, you shouldn’t overlook the costs and closing costs of reducing the equity in your home. and the possibility of foreclosure in the event of default.

Meanwhile, a balance transfer card can also get you better rates. In fact, what you want is one of those 0% interest promotional cards that you can transfer your high interest credit card debt to. Just make sure that you are able to pay off the transferred balances before the promotional period ends and the regular rate begins.

With personal loans, you can pay off multiple balances at once. And as we explained, you usually have only one monthly payment to deal with, and one with a fixed interest rate. Plus, a lower combined loan payment gives you more monthly cash availability. Be aware, however, of processing costs known as origination fees.

Is my debt eligible for consolidation?

Typically, debt consolidation covers credit card debt, personal loans, and medical bills. There are also loans for secured debt, which is created with a lien. If you’re not clear on what type of debt you have, try this primer on the differences between secure and unsecured ready.

Now you know a few questions to ask when considering debt consolidation. Take a look at your financial situation and see if the approach is right for you. Next, you need to decide which type of consolidation is best for you.

The most important thing is to start today.

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