If you have found yourself buried under a mountain of debt, you may be wondering what, if anything, you can do to dig yourself out of this financial hole.
While bankruptcy can be a viable option in the most extreme cases, you don’t necessarily want to jump straight to that conclusion.
Instead, getting a debt help loan, also known as a debt consolidation loan, can be a more effective way to deal with your mounting debts, and it won’t harm your credit rating in the same way a bankruptcy will.
So, what is a debt help loan and how does it work?
A debt help loan is a loan that is specifically designed to help you get your debt under control.
When you provide all of your debt information to a debt help lender, they’ll pay off your existing loans for you.
They’ll then issue you a new loan for the amount repaid on your behalf. Going forward, you’ll make your monthly repayments to the new lender.
The biggest benefit of a debt help loan is that it consolidates all of your debts into a single debt.
Instead of making several repayments each month to a variety of different lenders, you’ll have just one payment to a single lender.
This can help to streamline your financial obligations, making it easier to budget for your expenses and keep track of when your bill is due.
In consolidating your other debts into a new loan, you may also be able to get a lower interest rate, especially if you were paying a penalty rate on any of your previous debts.
This will reduce the amount you have to repay each month and it will also reduce the amount you have to pay over the life of the loan.
Even a small decrease in your interest rate can save you a lot of money over time.
Although there are many benefits to debt help loans, there are some potential downsides to be aware of.
When you use a debt help loan to pay off your credit cards and other debts, it can be tempting to start spending again, getting you even further into debt.
You’ll need to exercise your willpower and self-control to avoid falling into the same traps that got you into this financial trouble in the first place.
Depending on the debts you choose to consolidate in your debt help loan, you may also have to pay early exit fees.
These are charges that financial institutions apply to your account when you choose to repay your debt earlier than scheduled.
You won’t typically find early exit fees on credit card accounts, but you might for auto loans and other personal loans.
Be sure to check with your lenders to help you choose which debts to consolidate and which to keep repaying separately.
If you don’t wish to take on a large debt help loan, there are other options available to you.
For starters, get in touch with your banks and creditors. You may be surprised by how willing many lenders are to work with you if you are having financial troubles.
When they know you are committed to repaying your debts, they tend to be more flexible on the repayment terms.
You also have the option of refinancing your mortgage to get the cash you need out of your equity.
However, this could put your home at risk if you run into further financial difficulties, so consider this option carefully before making your final decision.
Credit card balance transfers can help as well, often getting you a 0-percent interest rate for the introductory period.
Start by researching various debt help lenders as each offers different repayment terms, interest rates, service fees and other important factors that might influence your decision.
When you have chosen a lender you believe meets your needs, gather all of the required information for the application.
This will typically include the lender name, account number and debt amount for each account you wish to consolidate. You may also need your recent pay stubs or other information to verify your income.
Once you have everything you need, you’re ready to apply!
Get in touch with us today to get started.