Should I Make Use Of Debt Consolidation?
If you’re looking to pay off your debt to take one step close to financial freedom, you may consider using debt consolidation.
Of course, you may have heard the term debt consolidation thrown around, though you’re not sure what in the world it means.
Today, we’re going to dive in and tell you all there is to know about debt consolidation so you can determine whether it’s the right tool for your needs.
Understanding Debt Consolidation
Debt consolidation is the process of taking out a single, large loan to pay off high-interest balances on credit cards. Instead of dealing with multiple credit card bills, for example, you’ll only have to deal with a single loan payment.
To do this, you can take out an installment loan through your lender. You’ll then receive a lump sum from the lender, which you can then use to pay off your high-interest credit card debt.
One of the most popular installment loan options is an unsecured personal loan. These typically come with higher interest rates than secured personal loans, however, which is worth noting. The good thing is that these unsecured loans have interest rates that are far less than notoriously high interest rates found on most credit cards.
What’s important to note about unsecured personal loans is that they do not require you to put your assets up as collateral, such as your car, your home, or your savings account. You might consider going through a secured installment loan if you want to obtain a lower interest rate.
One kind of secured installment loan option that is very popular is the home equity loan. A home equity loan gives you the option to pull a bit of equity out of your home to put it down on your credit card.
The interest rate that you are able to get with your installment loan will be based on your credit score. However, that doesn’t mean it’s impossible to lower your interest costs significantly. The beauty of a fixed term on an installment loan is that it offers an end date.
Rather than simply keeping up with interest rates that are part of your debt, you can use a single loan to start working towards removing that debt from your life all at once.
Final Thoughts – Paying Your Debt Off In The Most Efficient Way Possible
While there are certainly many approaches to paying off debt, we’ve found that de
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