8 Debt Consolidation TipsDebt has become a serious problem for most people now. Once you have decided to consolidate all your debts, the following eight important tips may be useful to you. They allow you to find the most suitable option for you and get control of your debt effectively.
Tip One: Take out a home equity loan if you own your home or investment propertyYou can consolidate all your debts by taking additional mortgage, which is secured by the property. One important reason is the interest rate normally is much lower than unsecured loan. Your regular payment could be more affordable and the term to pay off debt could be shortened too. Tip Two-:Take out a secured loan if you own a car, boad or motorcyle .You may use these personal properties as collateral to get a lower interest rate. But you need to be aware of the terms and conditions outlined in the agreement. Will you have to turn it over to the lender for the term of the loan? You need take time to understand the payment schedule, your responsility and consequence of missing your payment as any failure to meet the terms will leave you losing ownership of your property. Tip Three: Think carefully before going into credit card balance transfer.You need to be very careful about 0% or 4% credit card balance transfer offer from the mail and promotion. These attractive interest rates only apply to you for a short period, such as 6 months, when you sign up for balance transfer. You have to think whether you can pay off the whole balance after 6 months and how much will it cost you after offer expires. Tip Four: Negotiate with your creditorsAlways try to negotiate with creditors to see if there is any better options available.Your creditors are under no obligations to agree to renegotiate. However, it is often to their advantage as it means they will eventually collect. Tip Five: Consult a debt consolidation service .If you are really struggling on paying your debts, make sure that you start to work with a debt service before anything goes worse. There are two main types, credit counselling and debt settlement. Tip Six: Borrow money from family or friends .You may ask for help from parents, family members or good friends. The advantage is the interest rate is usually very low, or even interest free. You can do flexiable payment or pay off faster without incurring additional cost. However, the disadvantage is that it could potentially damage personal relationship if you cannot meet the payments. Tip Seven: Borrow money against your life insurance policyIf you have a life insurance policy, you may borrow 50% of your cover amount to consoliate all your debts. Of course, interest rate is lower and the loan is more likely to be approved faster. Sometimes, you don't have to pay the amount back if you can't. The amount will be deducted from the amount paid to your beneficiaries. Tip 8: Borrow or withdraw money from retirment accountIf you have retirement plans or superannuation scheme, you may be able to withdraw part of funds to help you through financial hardship. You need to check with these provider about the criteria and the amount you can apply for. But it should be your last resort as these funds are for your retirment life. Return to the top of 8 Tips for Debt Consolidation
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