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What kind of loan will help me consolidate all of my debt?
Thank you for your question. The subject of consolidating debt is always a popular topic. In order to address what type of loan to consider for consolidating debt, you first need to determine if consolidating is really in your best interest. Below are a few things to consider before consolidating:
Ask yourself why you are considering consolidating your debts
Compare the terms, fees, and annual percentage rate (APR) of the new consolidation loan to your existing debts
Consolidation loan versus a balance transfer
If you still feel a consolidation loan is in your best interest, you can consider a couple of different routes. Some financial institutions offer loans specifically for debt consolidation, where the lender pays off your debts directly. You could also consider an unsecured personal loan, and use the proceeds to pay off the debts. A third option might include a secured loan that is backed by the equity from an asset such as your home or vehicle. These loans enable you to borrow from your equity and tend to have more favorable rates as a result; however, failure to pay on a secured loan could mean losing the asset backing the loan.
In some cases, simply reviewing your spending, developing a debt repayment strategy, automating payments, and changing a few behaviors can save you the most time and money.
Thank you for your membership and please let us know if you have any additional questions.