| Consolidating debt is often the best way to | | | | Secured loans in these circumstances are more |
| ease financial pressures but before you jump | | | | expensive and the lenders are quick to |
| in there are a number of steps which can | | | | repossess your home if you miss payments. |
| improve your position and guide you through | | | | Only take this route if you are certain that |
| the options available | | | | you can make the repayments. |
| | | | |
| If you are having trouble balancing your | | | | Depending upon how bad your credit history |
| income and expenditure because of large debts | | | | is, so long as you maintain all your payments |
| then read on and discover your options in | | | | for the following 1 to 3 years, you can |
| credit card debt consolidation. | | | | replace this loan with a mortgage or re |
| | | | mortgage once your credit score improves. |
| Debt consolidation can be an excellent option | | | | There will be penalties however if you repay |
| when you find your finances getting out of | | | | a secured loan early. Ensure you read the |
| control but before you go out and sign up for | | | | fine print. |
| a debt consolidation loan there are a number | | | | |
| of factors you must take into account. | | | | 7) A loan secured on other assets |
| | | | |
| 1) Why are you looking to consolidate debt? | | | | If you have an expensive car, boat or plane |
| | | | you will probably be able to obtain finance |
| The basic principle of debt consolidation is | | | | using these assets as security. The rate of |
| that you take out a single loan and use that | | | | interest will be higher than a loan secured |
| loan to repay all your existing credit card | | | | on property. If you do not have property or |
| debts, loans and overdrafts. | | | | it is fully mortgaged securing a loan on |
| | | | other assets may be an option. |
| This normally results in lower payments | | | | |
| generally spread over a longer term. Before | | | | 8) An unsecured loan |
| you proceed with debt consolidation you | | | | |
| should first consider whether there is a | | | | If you do not have property or other assets |
| better alternative. | | | | an unsecured loan is often a possibility. An |
| | | | unsecured loan is usually over a shorter |
| 2) Sell assets to clear your debt | | | | term, normally up to a maximum of 7 years but |
| | | | occasionally longer. As a result the monthly |
| Rather than rescheduling your debts see if | | | | payments will be higher but the debt will |
| there is any way you can repay some or all of | | | | reduce quickly. |
| your debts yourself. Sell unwanted valuables | | | | |
| and other items. | | | | As the lender has no security your property |
| | | | and assets are less at risk if you default. |
| Depending on the item you can sell to | | | | The lender could, however, send in the |
| dealers, advertise in local classified ads or | | | | bailiffs if they obtain a court order. |
| through Ebay. Sell unwanted books through | | | | |
| Amazon. If your debts are very high and you | | | | Because there is no security expect to pay a |
| own your own home consider downsizing to | | | | higher interest rate, particularly if you |
| release equity. | | | | have a poor credit history. |
| | | | |
| 3) Pay more than the minimum off your credit | | | | 9) Don't forget the credit card option. |
| cards. | | | | |
| | | | If your debts are relatively low and you |
| If you can pay more than the minimum monthly | | | | still have a reasonable credit history |
| payments you should seriously consider | | | | applying for another card with a 0% or low |
| continuing with your existing credit cards | | | | interest balance could be an alternative to a |
| and clear the debts over the next 12 to 18 | | | | debt consolidation loan. |
| months. | | | | |
| | | | Go for a 0% balance transfer if you can |
| While it may mean restricting your spending | | | | realistically repay all or most of the debts |
| in other areas it will be the cheapest option | | | | in the 0% balance transfer period. If |
| long term. Of course you may still opt for | | | | however, there will still be a substantial |
| debt consolidation to make managing your debt | | | | debt at the end of the balance transfer |
| easier. | | | | period go for a permanently low interest |
| | | | rate. |
| 4) If you are currently only just managing to | | | | |
| pay the minimum monthly payments on your | | | | Be aware there may be a 2 - 3% charge on the |
| credit cards, or your total credit card debt | | | | balance transfer. To ensure you don't slip |
| is increasing each month then debt | | | | back into debt cut up all your credit cards |
| consolidation may be the right choice. There | | | | and close paid off accounts. |
| are a number of options when considering debt | | | | |
| consolidation: | | | | 10) Check all the options before making a |
| | | | decision. |
| 5) A mortgage or re mortgage | | | | |
| | | | As you research all the options it will |
| If you own your own home the lowest interest | | | | quickly become clear if there is one obvious |
| rates are obtainable by taking out a new | | | | solution. For many individuals there will be |
| mortgage to pay off your existing mortgage | | | | more that one option so it is essential check |
| (if any) plus enough funds to repay you other | | | | them all out before makuing a final decision. |
| debts. | | | | Go to a range of different lenders and |
| | | | mortgage or loan brokers and obtain the best |
| If repaying your existing mortgage will | | | | package for you. Remember you have the final |
| result in penalty charges consider a 2nd | | | | say and just enquiring does not commit you to |
| mortgage with your existing lender. The | | | | any course of action. |
| interest charged will probably be slightly | | | | |
| but not significantly higher. | | | | For a great many people debt consolidation |
| | | | provides an ideal solution to excessive |
| 6) Take out a secured loan with another | | | | credit card debt. Sorting out debt problems |
| lender | | | | takes a little time, effort and |
| | | | determination. Once you've sorted your debts |
| If you have already missed or been late with | | | | you will find life more enjoyable and |
| any payments, and as a result your credit | | | | relaxing and, with no debt collectors calling |
| score is too low for your mortgagor, consider | | | | or contacting you by post or phone, much less |
| a secured loan with another lender. | | | | stressful. |
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