You have two options to consolidate and reduce your debt if you
don't own a home. First, you can use the services of a debt
consolidation agency. They will negotiate lower interest rates
and smaller payments. The other option is to take out a personal
loan and pay off your debt. The best option depends on your
financial situation.
Debt Consolidation Agency
Debt consolidation agencies, also called credit counseling,
offer many credit services. Their primary job is to help you pay
your debt and bills by negotiating lower rates and payments with
creditors. If you have bad credit or on the verge of bankruptcy,
this service might be your best choice.
You aren't charged any fees by these agencies since they are
funded by financial companies. Financial companies don't want to
see you declare bankruptcy and not pay them back, so they are
willing to set up alternative payment plans.
Besides consolidating and reducing your debt, you can work with
credit counselors to improve your credit. They can offer you
advice on creating repayment plans, saving goals, and future
financial strategies.
Personal Loans
You can also decide to use a personal loan for debt
consolidation and reduction. With interest rates typically lower
than credit card rates, you can reduce your payments by
hundreds. One payment also makes it easier to pay than several
small bills.
With an unsecured personal loan, you will need to have decent
credit and steady income. Once you pay off your other debts, you
can decide to leave those accounts open for emergencies or close
them.
Before you pay off all your bills with a personal loan, make
sure you have researched several lenders to find the lowest
rate. Also be sure that you find a rate lower than what you are
currently paying on your bills. Personal loans are usually prime
plus 2% to 5% higher.
Explore Your Options
Before committing to either option for debt and bill
consolidation, research your choices. Request quotes from
lenders to see if you can find a good rate on a personal loan,
but also talk with debt consolidation agencies to see what they
can do for you. Choose the option that can lower your rates the
most given your credit history.
About the author:
See my recommended
Debt
Consolidation Companies online. Carrie Reeder is the owner
of
ABC Loan
Guide, an informational website about various types of
loans.
