Are you paying out your ears to credit card companies? Do you have a stack of medical bills? What about student loans? Wouldn’t it be great if you could lower your monthly bills and have just one payment? The theory is sound because there are many bills you can consolidate. Credit card bills, medical bills and loans can be consolidated. Debt consolidation is a tool to lower interest rates and interest rates on credit cards, auto loans and mortgages. However, it’s important to be smart about debt consolidation.
Many people look into debt consolidation online. This is a good resource as long as you do your homework on the company’s advertising on the internet. Many less-than-stellar companies lurk for victims online. Be sure to check any debt consolidation online organization out with the Better Business Bureau.
What should you expect when researching debt consolidation online? You should expect that most companies would require you to use the equity in your home to consolidate debts. In essence, you are getting a second mortgage. This is called a secured loan. Weigh this option carefully because if you default on the loan, you can lose your home.
The second option is to get an unsecured debt consolidation loan. You can find debt consolidation online lenders, but this option often requires good credit and a higher interest rate. The reason you get a higher interest rate is that the bank is taking on a greater risk in lending to you.
Debt consolidation online firms will work with your creditors to reduce balances as much as possible. The company then pays off your creditors and gives you a loan. You are now indebted to the debt consolidation firm. You now have one payment instead of many.
The best reason to research debt consolidation online is to reduce interest so you can get out of debt. Most often, the debt consolidation loan will be a much lower interest rate than an auto loan and especially credit cards. With five or more bills of high interest, you are paying interest for each of those debts.