If you are struggling with the debts you carry right now, from auto and personal loans to credit cards, then you are in good company. Americans are all in debt; in fact, American households carry $ 14.6 trillion in debt right now when the average American is buried in debt totaling over $ 90,000. Consumers looking to get their debts under control use many different methods to address it, including debt consolidation. While debt consolidation is a way to address all of a borrower’s credit cards, it can also be an effective way to deal with auto and personal loans. So what does it mean to consolidate a loan?
Debt consolidation is the practice of consolidating multiple outstanding debts from a consumer into a single new loan, usually with a lower interest rate or a longer repayment horizon (or both). This practice streamlines debt settlement and typically lowers the payments a borrower has to make each month, making the debt more manageable. Since this practice is a popular way consumers address their debt, it is not surprising that lenders are increasingly offering loans that are specifically designed for debt consolidation. Additionally, balance transfer credit cards are another way borrowers can consolidate their outstanding credit card debt. Finally, that Debt settlement services Offered at National Debt Relief are a form of debt consolidation.
While credit cards often make people think of debt consolidation, you can use this technique to deal with other types of debt as well. For example, borrowers can use Auto Loan Consolidation to combine two or more outstanding auto loans. Car loan debt consolidation can be useful when the original interest rate or repayment horizon is too difficult to manage. These types of loans can help you lower your interest rate, monthly payments, and improve your credit score. You may even be able to get some money back from the refinancing process.
You can use debt consolidation for other types of loans as well. For example, if you are currently dealing with a high-yield personal loan, a home loan for a vehicle or other asset, or some type of payday loan, it may make sense to consolidate that debt into a new low-interest personal loan. Getting out of a situation where you are paying inappropriately high interest rates and trying to deal with large monthly payments is a great way to get a grip on your debt. Additionally, eliminating the need to service multiple credit and credit card payments by consolidating them all into a new single loan can help make your overall debt more manageable. After all, it’s a lot easier to remember just one payment per month rather than several.
While debt consolidation can be a great tool for handling your outstanding loans and credit cards, it won’t work for everyone. For example, if you have poor credit, it may not be possible to get a debt consolidation loan at an interest rate low enough to be worth it. In some cases, you may not be able to get a new loan at all. If your employment situation has recently changed and you are underemployed and made less money or lost your job, debt consolidation is likely not a good option for you. After all, if you continue to spend more money than you make, consolidating your debt into a new loan will not fix the source of your problem.
Fortunately, if debt consolidation isn’t well for you, there are other ways to help you deal with debt. For example, credit counselors can help you figure out the best ways to organize all of your debts and get a grip on your spending habits. In many cases, loan advice from nonprofit organizations is inexpensive or completely free. The debt settlement services National Debt Relief offers could also be a good choice for you, especially if you don’t believe that you will ever be able to repay the large debts you currently carry. Finally, in extreme financial situations, bankruptcy can be an option to address your debt situation.
What does it mean to consolidate a loan? Taking out multiple existing personal loans, payday loans, and other debts and combining them into a single new loan can be a great way to make your total debt more manageable and easier to pay off. Consolidating loans, especially those with high interest rates and short payment horizons, can be just what you need to get your financial house back in order. Talk to a trusted financial expert and see if debt consolidation is a good choice for you.