Consumers who are struggling under the weight of multiple debts have traditionally turned to debt consolidation loans as a way to find more affordability for their debt obligation payments and avoid missing monthly payments that could result in a poor credit score or further financial troubles, but when it comes to debt consolidation loans for personal consumer debt assistance, there are different options which consumers may use to accomplish their goal of debt relief.
Obviously, advisers often suggest that consumers research their options when it comes to dealing with various forms of debt as consolidating may not be their only opportunity to find debt relief. There are some individuals who have simply formulated a budget or spoke with a credit counseling agency to help them organize their personal finances so that there income can be more efficiently used to repay their debts.
Also, there are those who feel that debt consolidation is simply a bad idea because it can cause the overall costs a consumer must meet to increase as a higher principle amount, even with an affordable interest rate, will take longer to repay and higher costs may result. However, if consolidation is in a consumer’s best interest, there are, again, ways that this can be accomplished and lead to debt relief.
Some homeowners who are in a good financial position, but may be struggling to pay their debts and fear that any unforeseen expenses could result in financial trouble have turned to their home as a way to consolidate debt. Some homeowners have used a home equity loan or have participated in cash-out refinancing as a way to use the equity that they have built in their property to erase these debts and essentially placed them on their home loan payment requirement. While this has been helpful for some, as mortgage rates may be lower than certain unsecured interest rates on personal debt, this type of consolidation is not often advised by financial counselors because the inability of a homeowner to meet this higher mortgage debt obligation could result in the loss of their home.
There have also been offers lately for balance transfer cards that have helped many consumers consolidate debts onto one, low interest credit card. Many of these offers are rising as banks feel consumers can better handle debt despite the fact that lending was reportedly very tight over the past months has effects from the recession were still being felt. Yet, consumers who use one of these balance transfer options to move various debts onto one credit card must make sure they are aware of the time limit they have for their introductory rate as some cards may drastically increase once this introductory period has expired and if the balance on this card is not either erased or greatly reduced, cardholders could find themselves in a position where they, again, are paying a high overall cost on their debt.
While there are personal loans that can be used for debt consolidation through either traditional banks or credit unions, consumers are, once again, prompted to research all of these options as well as debt repayment and budgeting opportunities that could help them avoid consolidating at all. Understandably, debt consolidation is not a sure fix for one’s various debt difficulties, but when it comes to avoiding missed payments, consumers must take action as soon as financial troubles arise so that the best opportunity to repair their finances or simply get on a more stable financial ground can be found.