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If you’re falling behind on bills and running into debt, then you should consider taking out a fixed rate debt consolidation loan. They will be used to control your debt levels, and lower your monthly outgoing costs.
How Do They Work?
There are two different ways you can consolidate a debt. That’s with a balance transfer credit card, or with a fixed rate debt consolidation loan. A balance transfer credit card allows you to transfer all of your debts onto this one card, and pay the balance off in full. In order to qualify, you will need to have at least a credit score rating of good.
Fixed rate debt consolidation loans allow you to take out a loan from a lender to fully pay off all your debts. In return, you will pay back this loan with interest back to the lender, in an agreed amount and time. This will let you pay one payment each monthly, for a smaller amount than your total debts before, in a more organized manor.
When Is It Time To Consolidate?
As consolidation loan will help you get ahead of your financials. So, if you’re in debt with multiple creditors or lenders, you will need to consider going ahead with it. The total amount of your debt, not including mortgages, needs to not exceed over 40% of your gross income. Ensure you do a thorough credit check, in order to know if you’re eligible.
If you have a high enough score, ranging 600 plus, then you will be able to qualify for a 0% interest card, to manage your debt. Your cashflow needs to be consistent over a few months, to prove you have income to pay back the loan.
The first step in acquiring a debt consolidation loan is with a consultation, followed by pre-approval once you’ve completed your paperwork. The best way to get this done quickly is by working with an experienced loan provider, such as The Home Loan Expert, who will use their excellent customer service to help close your loan within days, check out their site at https://thehomeloanexpert.com/.
What Is Debt Settlement?
Debt Settlement works differently from debt consolidation. You directly will go to the creditor and make an offer to settle the debt. For example, if you have a debt of $5,000, and it’s been a while, you could offer a lump sum of half. If they accept, then the matter will be resolved.
It has pros and cons, as you will need to pay off a significant amount of the debt in a one-off payment, rather than a debt relief plan. Your credit score will be affected, as you never paid the full amount of the debt.
How To Secure Your Financials Going Forward?
Once your debt is cleared, you should regain control over your financials. Avoid falling back into debt, as this will hurt your credit score. You should speak to a certified financial advisor and planner to get help with spending your money, so you don’t do it again.