If you have many different credit card and loan payments each month, there are ways to consolidate your debt into one loan so that you only have to worry about a single monthly payment. This is often done to help slash interest rates and make paying off debt easier and more efficient. Common types of consolidation loans include:
Home equity loans
This type of loan, which is only available to homeowners, involves borrowing against the value of your home. Although this type of loan usually isn’t as high in interest as some other types of loans, it comes with the risk of potentially losing your home should you default on your loan payments.
Standard debt consolidation loan
This type of loan can be applied for at a bank, or credit union, for example. A standard debt consolidation loan agrees to combine all your debts (normally credit card balances) into a single, stand alone loan. The advantage to you is that the interest rate on a standard debt consolidation loan is usually lower than what you were paying on all of the other accounts.
Offers to transfer balances
Have you received credit card offers about transferring your balances onto a new card? This is technically a type of debt consolidation loan and can be a good way to get all of your different credit card charges onto one single account. Usually, you will be offered an introductory zero percent interest rate for 12 to 18 months on a balance transfer offer. In order to fully take advantage of this type of debt consolidation, it is imperative to pay off as much as you can during this interest-free time period. Otherwise, the interest charges that may take effect after the interest-free time period ends, can be quite steep.
Student loan consolidation
Unlike a standard consolidation loan, with a student loan consolidation, the federal government is usually your lender. Typically, the government offers these loans with flexible repayment schedules and low interest rates. Keep in mind, however, that with student loan debt,the government may be able to garnish your income should you default on those loans.
Although debt consolidation can be a great way to get your debt under control and lower your overall monthly payments, the best way to tackle debt is to pay it off completely. If you’re the recipient of a structured settlement or annuity payment stream, you can sell some or all of your future payments to Peachtree Financial Solutions for a lump sum of cash now. With settlement funding, many of our customers have been able to pay off their credit card bills and loans and become free of debt. The start to financial freedom can be only a click away – contact us today to learn more about how the settlement funding process works and to receive your free quote.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.