How Can I Consolidate My Debt?
Debt consolidation is a loan used to payoff or pay down other loans. A Debt consolidation loan consolidates debt and allows you to make one payment instead of many payments.
The goal of a debt consolidation loan is to lower your monthly payments, reduce interest and relieve financial pressure.
If you own your own home, the best types of debt consolidation loans are home equity loans or 2nd mortgages. These can give you a much lower interest rate and monthly payment then an unsecured loan.
Another way to lower your monthly payment is to lengthen the term of your loan. The more years you opt for the lower payment.
Now Remember, Debt consolidation does not pay-off your debt, it merely enables you to payoff your existing debt faster and with less pressure.
It doesn’t magically give you more money to spend, your debt is the same. Just consolidated and hopefully at a lower interest rate.
After a debt consolidation loan you should cut up your old Credit Cards.. Don’t cancel them, but cut them up. If you cancel them it will lower your credit score, because your “available credit” will be diminished. Available credit is an important factor in your credit score.
One of the best places I’ve seen to consolidate your debt is Prosper.com. Private investors bid on your debt, much like Ebay. I highly recommend you look into Prosper.
And if you own your own home, and have decent credit, check with your local banks to see offers they have on Equity or Debt Consoldation Loans. More and more banks are offering unsecured debt consolidation loans, some of these are good deals, but make sure you read the fine print..
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Lori Beck