Many consumers are using debt consolidation loans as a way to pay off various personal debts and find affordability through these consolidation efforts in terms of lower month-to-month payments. Obviously, consumers who are having trouble meeting their minimum monthly payments on multiple credit card debts will find that a debt consolidation loan can potentially bring lower monthly costs and, for many, the affordability that is needed to avoid missed payments and alleviate financial strain in their lives.
However, there are not only different types of debt consolidations that can be used outside of a traditional debt consolidation loan, but when it comes to finding an overall affordable consolidation option, many financial advisers differ on the methods that should be practiced in these instances. As an example, someone who can acquire a personal loan and consolidate various debts may be in a financial position to formulate a budget that will allow them to avoid acquiring a debt consolidation loan altogether and pay off their consumer debt balances one at a time.
Yet, there are also homeowners who have used home equity as a way to consolidate debts and, in cases where they qualify, refinance their home to a more affordable rate and group these debts into their mortgage, which again will usually be at a lower rate than, for example, a credit card interest rate. While there are also credit cards that can allow for credit card debt consolidation through the use of balance transfer options, consumers who are looking for these debt consolidation opportunities must make sure that they not only choose the proper plan for debt consolidation, as it relates to their personal situation, but that may make efforts to erase this consolidated debt obligation as well.
Again, many advisers feel that consumers should simply concentrate payments on various forms of debt separately, as this can cause the overall costs that one will eventually pay to be lower, but if a consumer cannot afford this route due to financial strain, understandably, consolidating may be the only way to avoid missing payments. However, consumers who are considering consolidating their debt need to realize that it can take longer to repay a higher principle amount and this could lead to higher costs that must be met when interest is factored in.
While there are consumers who may be able to pay more than the minimum monthly payment on their debt consolidation loan or may use a balance transfer card with a 0% introductory rate to consolidate debt and erase these obligations under no cost from interest, exploring these different options is vital for consumers who worry that without debt consolidation, they may miss payments on debts or completely default on a particular consumer debt obligation, which would obviously do damage to their credit. Yet, with various debt consolidation opportunities available, consumers may either use these consolidation options, speak with a counselor about debt relief assistance, or simply formulate a plan that allows them to begin paying down multiple debts one source at a time from either the smallest amount to the highest or by combating debts with the highest interest rate to the lowest.