Debt Consolidation

You take out one loan to pay off all your debt. This loan may carry a lower interest rate than your debts. You make fixed monthly payments on the loan until it is paid off.

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Debt Consolidation Loans

A debt consolidation loan is a viable option for a consumer who has a low debt to income ratio, high credit score, and sufficient income.

If the bank is willing to give you a loan with a low-interest rate – in this case, debt consolidation is an excellent option.

If you can replace bad debt with good debt – go for it! Debt consolidation loans can pay off everything from your car payment to credit card debt.

Unfortunately; most of the alternative lenders (outside of bank loans) – charge high fees and interest rates. A debt consolidation loan should be used to save money, not rack on more debt and costs.

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What about a home equity line of credit over a debt consolidation loan?

If you own a home and have sufficient equity in it, getting a home equity line of credit will be a better option in many cases, over getting your typical “bank loan”. It is common; to get a home equity line of credit where your interest rate could be below 6%. Having good credit and owning a home, is required to get a home equity line of credit.

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If you cannot get a low-interest bank loan or home equity loan, what other debt consolidation options do you have?

If your goal is to become debt-free; consumer credit counseling, debt validation or debt settlement may be a better option for you, over debt consolidation.