Do you know that the average American has around $38,000 in personal debt? But should you use debt consolidation companies to consolidate your loan?
Debt consolidation companies want to help people to better manage their debts. Usually, this involves taking out new credit in the form of a debt consolidation loan to pay off existing credit.
However, a debt consolidation loan is not always the right step to take for everyone. You should beware of the high fees some companies charge for arranging the loan.
If you are currently in debt and looking to know the truth about debt consolidation companies to see if they are worth it, we are here to help. We are going to share more information about debt consolidation and share some tips to help you get out of debt.
What is debt consolidation?
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Consolidating your debt means combining your unsecured debts into one. You can combine your credit cards, payday loans, medical bills, and personal loans into one monthly bill instead of having multiple bills throughout the month.
The key is to look at a debt consolidation company’s reputation. Platforms like Debthunch Reviews will help you figure out if a company has been truly helping people or not. Some companies will simply take your money and not lower your interest rate.
Others might set your monthly payments for a long time to give you a lower monthly payment, but when you add up all those monthly payments, you might end up paying an insane amount in fees.
If you feel confident in your own negotiating skills you can contact each of your creditors and negotiate for yourself. This will require you to be confident and stand behind what you are asking for. Make sure that you have cash on hand to offer a settlement.
Sometimes a creditor would rather have some of the money than none at all. If you talk with them about your finances and tell them you can pay a certain amount today to settle the account they might say yes.
DIY debt consolidation
If you have credit and qualify for a credit card with a 0% interest balance transfer or promotional APR, this would make sense. You can move your debt over to that card once you are approved.
Double-check if the promotional APR expires and if it does you will want to calculate how much you have to pay each month to have it paid off before the promotional rate expires. Do you own your home?
If so, you can look into taking out a home equity loan to pay off your debt. If you choose to go this route please keep in mind that you are putting your home as collateral. This means that if you default on the loan you will lose your home.
Debt consolidation companies or not? That is the question
Now that you know more about debt consolidation companies you can make an informed decision of whether to go this route or not. Make sure that you choose the best option for your specific needs.
Once you get out of debt or are on your way to being debt-free, you have to remember to keep your spending habits under control. Did our blog post help you today?
Please check out our make money online section to see if you can find some temporary side money to get out of debt even faster!