The Top Factors of Debt Consolidation by Using Personal Loans

One of the top reasons for which people take out personal loans is to help consolidate their credit card debt. It’s a risky approach because if you don’t do it the right way, you risk getting buried under even more debt. However, doing it right can get you out of a pickle.

The Top Factors of Debt Consolidation by Using Personal Loans: eAskme

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When considering such an option, you should also take into account the fact that there are other types of loans which can help you get out of your current situations. While a personal loan could be very effective, think about these types of loans as well:

Alternative loans

Alternative loans refer to people connecting online with investors in the interest of getting a personal loan. The advantage here is that these investors usually offer you a much lower interest rate, making it an extremely beneficial situation for you.

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There are numerous online services with the purpose of putting these kinds of people together: people with debt and people interested in lending them money. If your bank is offering you way too high interest rates, it might be a valuable option to consider.

Credit card balance transfer

Another way through which you can pay off your credit card debt is by using a new credit card to pay off the old credit card. At first glance, this sounds like something from the first page of a “Don’t do this” book, but it can be a useful solution if you can guarantee to yourself that you can pay off the debt. You see, it’s a little more intricate than that.

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In fact, the only way this is going to work is if you can get a deal on a new credit card which gives you 0% interest rates for balance transfers. Usually you would be able to find such an offer that lets you transfer balance free of interest rates for a year. If you can pay off your debt in a year, before that interest rate free pass expires, you can get yourself out of paying a lot more in interest.

Secured credit on your house

If you’re not afraid of going the secured route, which means putting up assets as collateral, you can request a home equity loan, which would grant you a line of credit. The risk of losing your house for the benefit of lower interest rates is something that you should ponder on thoroughly before making a decision.

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Which is the best one for you?

The truth is that neither option is “the best”. It’s all a matter of which suits your specific needs better. However there are some guidelines you can follow in order to get to that “correct” answer sooner.

• Always try to go for the simpler solution which involves you having the least amount of active debts to juggle with
• Try to find the lowest interest rates possible as that can play a major role in you “skipping’ a lot of debt
• This might sound weird, but try to ask for a better deal. If you’ve already been a loyal customer for a while, you have some wiggle room and might be able to get a better deal based on that
• Do the math before agreeing to anything. You should only get a loan of any type after you’ve made sure that it works for the purpose of clearing your existing debt