A debt consolidation loan is usually a loan that is backed by your home. Most of the time, you can pay off all of your debts with this kind of loan, leaving you with just one loan to pay back. Not only does this save you money, but it can also help your credit score.
Still, a consolidation loan should be seen as a serious step and a close-to-last resort, not as a casual way to solve a financial problem that doesn't need to be fixed right away.
Here are a few ways to get rid of all your debts at once.
Put them both together
By doing this, you'll know exactly how much you owe in total. This will also make it easier to pay them back, since you'll know exactly how much you need to borrow. Taking this step will also make it easier to manage your debts, since you'll only have to make one payment each month instead of several.
Different Rates of Interest
The interest rate on each credit card is different, and it can be anywhere from less than 10% to well over 20%. It is a good idea—no, a great idea—to compare credit card and loan rates. In the long run, you could save a lot of money by doing this.
Visit a Lender
Ask a lender what you should do and see if they can help. You should be able to find a lot of lenders in your local phone book, or you can ask a real estate agent for a suggestion. You might even want to look online to find a lender with a good name.
Your Best Available Option
There are a lot of different kinds of loans, rates, lengths of payments, loan amounts, etc. Even though you have all these options, it is still up to you to choose the type of loan that fits your finances the best. Once you know how much equity you have in your home and how you will pay back the loan, you can use this important information to help you make the best choice.
As a side note, you should know that loan and credit card interest is not tax deductible.
Apply, but be sure to read the fine print
Make sure you have filled out the right forms and given the lender you choose all the information they need.
For your credit card debts to be properly paid off and put to rest, you will need to give all the information you can get from your credit card payments. This process could take 3 to 4 weeks, so please be patient.
By combining your debts, you can lower the total amount you owe and the amount you have to pay each month. But you must be careful to make your payments on time or you could end up in a worse situation than when you got the loan.
