Do you have a few different debt accounts open? Are you having a tough time managing them all? Or maybe you know you can get a lower interest rate on a new, larger loan. Whatever your specific reasoning behind wanting to consolidate your debt, it is likely a great idea! Here are five important tips to help you successfully consolidate your debt.
Know The Amount
Before you look into debt consolidation options, figure out exactly how much debt you have. Add up all your credit card balances, car loan balances, student loan debt and even the money you may own to your family or friends. Once you have this total number, you will know how much you need to apply for in order to fully consolidate your debt. Do not take out more than this or you will just have excess debt to pay off for no reason! Also, be sure to take out enough so that you truly can consolidate all of your debt into one easier payment.
Decide When to Consolidate
Maybe you have a while before you need to consolidate your debt or maybe you want to pay off some debt immediately in order to avoid fines and fees. Consider your time frame and this can help determine the kind of loan you apply for to help with your debt. If you need instant money, look for fast cash loans or same day loan to help you get immediate cash. If instant money is not necessary, take your time and shop around for loans.
Know Your Score
Take a look at your credit report and learn what your current credit score is. The better your score, the more likely you are to get a loan to help you consolidate your debt. If your credit score is low, thoroughly look over your credit report and see what is bringing that number down. Dispute any mistakes that you find on your credit report and also start working to bring your score up. A higher score will help you get a better loan to consolidate your debt.
Direct Payment vs Cash Loans
When applying for a loan to consolidate your debt, some lenders may pay the other debt collectors directly. You will still apply for the loan but the money will go right toward your existing debt and never pass through your hands. This can be a great option and much easier since the lender is paying for you. However, you may feel better if you get a cash loan and then divvy up the cash yourself.
Know The New Rates and Monthly Payment
When you consolidate your debt using a loan, you will have a new monthly payment in addition to new interest rates to learn. Figure out what your new monthly payment will be, how long you will be paying of your new debt and what the specifics of the loan term are. Before you sign on to get instant money and consolidate your debt, be sure that doing so will save you money!