What Are The Different Types Of Debt Consolidation Loans Available?

March 25, 2019

Today, all of us use credit cards, and we sometimes make a lot of purchases. After making huge purchases, we fall into little difficulty in repaying those bills. Make no mistake that you can pay the credit card bills later. The sooner you pay those bills, the better for your future. If you miss the date of bill payment, you shall earn a bad credit history. Your poor credit history will pull down your credit score. Once a bad credit score is earned, you would not be able to turn it into good credit score easily. It would take years to correct the credit history. Moreover, your bad credit management history will not be erased. Whenever you would go to a bank or other lenders, your credit history will be checked. As a result, you would not obtain a deserving loan from the lenders.

Slash off Size of Debt with Debt Consolidation Loan

When you are habituated to make many expenses on credit cards, different bills shall be generated for different dates. Some people have more than one credit card. So, debts of such persons are more complicated or complex. For small amount debt on the credit card is simple to be managed. The hassle starts when the amount is big. When you make a lot of big purchases in a small period with multiple credit cards, debt settlement or credit card bill payment will turn into a big time hassle for you.

To deal with such a complex situation, you need to opt for a debt consolidation loan. A debt consolidation loan can help you to carve down debt in two ways. These ways are discussed below:

  • If you get a debt consolidation loan from the bank, you shall have low repayment fee for such loan. Now, to settle credit card bills, you can ask for monthly repayment premiums from credit card companies. They would allow you to repay the bills in monthly installments, though repayment interest rate will be high. So, when you choose a debt consolidation loan, you can repay your debt with a lower interest rate. You should use the loan amount in paying the credit card bills instantly, and now you have only the loan to repay at the interest rate as applied by the bank.
  • Your current creditors may not allow you monthly installment based repayments. Even if they allow, they will feature a high rate of interest along with additional late fees. Paying such extra money is a burden. You can shed off the burden quite easily with debt settlement loan. It will allow you a long time for debt settlement. You can use the loan amount to pay your present creditors. Now, you have to repay the debt consolidation loan through monthly installments for a fixed period. If you have secured a loan from the bank, repayment terms and time will be quite flexible.

Types of Debts That You Should Consolidate

Before knowing the types of debt consolidation loans, you need to understand the ideal time to go for a debt consolidation loan. What could be the ideal time to get such a loan? To find the answer, you need to check reviews of top debt consolidation companies. There are a few expenses that could lead you into financial hardship. You need to judge such situation well. If you feel future financial feud, you can go for the debt settlement loan to avoid such feud. For example, you can consider the following things consideration.

  • You may have to make medical expenses for yourself or your family member. Even though medical insurance is there, today no one gets complete coverage of the medical insurance. People have to make certain expenses from their pockets. A credit card is used for paying such medical bills, and it increases your debt. To consolidate your credit card debt, you should go for the debt consolidation loan.
  • Due to cyclone or flood, many houses are damaged. For house renovation, we have to make a lot of expenses. These expenses come suddenly without any notice or planning. Thus, people tend to go for some loans to meet house renovation expenses. When you have multiple loans from different sources, you can look for the debt consolidation by applying for debt settlement loan to the bank.
  • For a wedding, people make a lot of expenses. Wedding expenses are planned, though it is always found that wedding budget goes beyond your expectation. To get the excessive money, people go for multiple loans. With a debt consolidation loan, these multiple loans can be paid off. Now, only the debt consolidation loan has to be paid.

Direct Loan for Debt Consolidation

The commonest type of debt consolidation loan is to go for a direct loan. You need to apply for a personal loan to the bank, and the reason for the loan should be shown as debt settlement. When you have a good credit score, getting a bank loan would not be a big time hassle for you. In the case of your poor credit score, you need valuable asset as collateral to get a loan. The third way of getting a bank loan for debt settlement is to find a co-signer. A person with good credit score can be the co-signer. The bank shall provide you the loan on the reputation of the co-signer.  If you fail to repay the loan, co-signer will be held responsible for paying the loan.

Home Equity Debt Consolidation

You can go for a home equity loan to consolidate your debt. The benefit is that such loan comes with a long repayment term. From 10 to 12 years will be the repayment tenure and thus paying the debt will be easier. You do not have to change your lifestyle to repay the loan.

Debt Consolidation Service

The most professional way of settling your debt is to hire a debt consolidation service. A lot of professional services are there, featuring excellent solutions for debt settlement to the people. They can offer professional advice and advanced suggestions on the process of debt consolidation.

Stay tuned to us for more information on debt consolidation service and how it can help you!

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