There are numerous benefits of debt consolidation, butto avail yourself of those benefits, you have to know about the proper way to consolidate your debt and the best service providers too. So, what is the best way to consolidate debt? It will depend on a variety of factors. However, there are some really common ways in which the people avail debt consolidation. Below mentioned are some highly popular ways to consolidate debt and refinance it too. You can go through the ways and decide which one you have to opt so that you can follow the proper procedure for debt consolidation and make most out of it.
Personal Debt Consolidation
In this type of debt consolidation, you basically get a personal loan which will consolidate all your present debts. It can be regarded as the most popular debt consolidation form. If you want to avail yourself of a personal debt consolidation, then you will have to contact a service provider and tell him about the reason why you need to consolidate your debt and what benefits you have in mind. Ask him if you will be able to achieve the objectives.
When your application is approved, you will be given some capital which will pay off all the present debts. Now, you have to pay back the new loan that you got from the service provider at the rate of interest you agreed with the service provider. This is a good way to consolidate your debt and refinance it at the same time. You have to keep some things in mind. Firstly, you have to ensure that total loan cost is assessed and the rate of interest is less than what you pay at present. If you show any lack of research, you might have to pay ahigher rate of interest.
Take Loan While Putting Home As Collateral
If you are a homeowner and there is a significant equity tied to your home, then you can opt for this. Basically, you can attain a new mortgage on your owned property, and the money you receive can be used to pay off the current debts. Mortgages will need to put your house as collateral, and the rate of interest will also be much lower than other debts. However, you are putting your home at stake so do it only if you are absolutely sure about repaying the loan in time.
Credit Card Balance Transfers
Credit cards can also be used to consolidate debt, and it becomes one of the effective ways to relieve yourself from the payment stress for some time. Getting many credit cards will leave you in a high rate of interest on the balance.So, in this case, you can have a new credit card and transfer the balance in it at 0% introductory APR. Do your research and get a credit card that offers up to 18 months free of interest spending and balance transfers. The credit card balance transfer will reduce the stress of high rate of interest.
