People who regularly borrow money to pay their bills on time need debt consolidation help. They usually pay one credit card balance using another, and miss paying one bill to pay another one. They are perennially running short of cash and are often stressed out from having to deal with numerous creditors.
A single payment is made wherein the repayment tenure of debt is increased and the overall interest rate is decreased, as compared to making payments to many creditors, each charging a higher rate of interest.
One could go to a company that specializes in consolidating all existing debts of a person. Such companies may either charge a monthly fee or interest. One could also approach non-profit organizations for free debt help.
Process Of Debt Consolidation
Irrespective of whom one goes to for debt help, the process remains the same. It would entail:
Companies that specialize in consolidation of debts offer credit help by giving either a secured or unsecured loan. A secured loan is one in which the borrower has to place an asset as collateral with the company. He can also take a home equity loan. An unsecured loan is taken for a shorter term and has a higher interest rate. With a variable rate debt consolidation loan, it is possible to make additional repayments when one has surplus funds. In a fixed rate loan, only a fixed repayment can be made during the loan term.
Advantages And Disadvantages
Merging your debts has the following advantages:
The disadvantages are mentioned below:
When getting debt consolidation help, one should be careful to select a legitimate lender or else the process will worsen your financial condition. To choose the best lender, one should compare quotes from different organizations; find out the exact charges, interest rates and penalties. One should also make inquiries about their reputation.
Debt consolidation help is a boon for people who are deep in debt. Debt consolidation credit help can be received from companies that specialize in this. One can also get free debt consolidation help from non-profit organizations.