Debt Consolidation Loans

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What - Definition
Debt Consolidation Loans - Loans of any type taken out for the express purpose of consolidating debt. Previously we discussed the specific named product known as a Debt Consolidation Loan

Here we consider the widest list of debt consolidation loans alternatives - all of which may be used to achieve the same result or better (cheaper). The following "Debt Consolidation Loans" are alternative options for securing funds that you may then use to pay off creditors yourself. Loans for debt consolidation are therefore available in various forms - not just the specific named product. Banks, for example, may even market multiple products as useful loans for debt consolidation purposes.

loans for debt consolidation

It is important to recognize that you have choices regarding debt consolidation loans. It is recommended to read our Loan article first before considering these wider lending options for easy debts relief.

Types

1. Debt Consolidation Loans (Product)
2. Home Equity Loans
3. Home Equity Line Of Credit
4. Home Cash Out Refinance
5. Auto Refinance Loans
6. Credit Card Balance Transfer
7. Personal Loans (for debt)
8. Personal Line Of Credit For Debt
9. Other Action Loans

Loans For Debt ConsolidationThe best debt consolidation loans options depend on individual circumstance. This includes income, credit score and debt-to-income ratio. Fundamentally, the best debt consolidation loans are the ones that come with the lowest interest rate to help relieve the immediate repayment burden. All options have pros and cons however and careful consideration is necessary.

 

1. Debt Consolidation Loans (Product)

The solution most often seen marketed in the context of debt services. This is the only option that may involve the lender stepping in to administer the creditor payoff on your behalf. All other loans options require that you payoff the chosen creditors yourself using newly acquired funds.

2. Home Equity Loans - HEL (installment)
3. Home Equity Line Of Credit - HELOC (revolving)

Loans Debt ConsolidationIf you own a home with sufficient equity and have reasonably good credit then you may be able to secure funding on terms more favorable than debt consolidation loans products (some of which may be secured on your home anyway). The added advantage is that the interest paid is typically tax deductible, unlike debt consolidation loans products. This affords a double saving opportunity over specific debt consolidation loans products.

Cons

  • If you default on repayments your home is at risk.
  • May preclude a first mortgage refinance opportunity
  • Must be paid back in the event of sale.
  • Could lead to negative equity and affect mobility
  • May involve securing previously unsecured debt (eligible for inclusion under bankruptcy)
  • May give rise to more debt if you do not stop other borrowing
  • Maxing out revolving credit may affect credit score

4. Home Cash Out Refinance

Should afford lower rates than a HEL and debt consolidation loans products

5. Auto Refinance Loans For Debt Consolidation

An alternative to the debt consolidation loans product, some banks market as loans for debt consolidation. Loans use your vehicle as the collateral.

6. Credit Card Balance Transfer

Best Debt Consolidation LoansDo it yourself loans. Debt consolidation loans alternative for dealing with credit card debt. Balances held on credit cards are akin to loans. Debt consolidation takes place when you transfer balances onto either a new card with an introductory rate or an existing card having the best rate. If you transfer entire balances then your creditors are paid off (but not consolidated if the original accounts remain left open for use).

7. Personal Loans (for debt)

A debt consolidation loans product alternative. Normally offered at a higher interest rate than a HEL but potentially a better rate than that available with the specific debt consolidation loans products or credit cards. Often unsecured and requiring good credit in order to qualify or qualify for a rate that makes the consolidation transaction viable. A co-signer may help improve the rate in some cases.

8. Personal Line Of Credit For Debt

Another debt consolidation loans product alternative

9. Other Action Loans

Loans for debt consolidation purpose that involve less obvious or more creative action

- Borrow against 401K
  A popular reason for people tapping into their 401K (or other thrift plan) is to use the funds as loans for debt   consolidation.
- Margin and Collateral Debt Consolidation Loans
  Margin: take stocks and financial instruments as collateral. Other loans can be secured against appraised valuable   assets or equipment.
- Life Insurance
  Debt consolidation loans source; borrow from a policy.
- Family funded Debt Consolidation Loans.
   Formalize an arrangement to borrow from a family member.

Debt Consolidation Loans Providers

Banks
Banks that offer debt consolidation loans often require a good or average plus credit score. You may not be eligible for product specific bank debt consolidation loans or any interest rate offer may not be low enough to make bank debt consolidation loans worthwhile for consolidation. Improve rates by agreeing to routine electronic payment.

Credit Unions
Credit union debt consolidation loans may offer lower interest rates and improved terms compared to bank debt consolidation loans alternatives and other lenders.

Finance Companies
Also offer loans for debt consolidation to those with below average credit.

Debt Consolidation Loans Companies
Loans for debt consolidation are available to those with good through poor and bad credit. Debt consolidation loans companies require the greatest due diligence. Watch for any high closing costs, fees and hidden terms. Study the APR interest rate offered and all terms closely. Whilst any borrowing candidate with bad or poor credit must expect a less favorable interest rate offer, there are both worthy an exploitative lenders to navigate. A reputable debt consolidation loans lender will offer choices to those with poor credit. Some may only offer secured debt consolidation loans. 

Peer to Peer Lending / Social Lending
Peer to Peer lending is a process where personal lenders and borrows meet in a common place. Personal debt consolidation loans funding is made possible using monies that members put up for lending (invest). Approval may be easier. You have choices. Note that there are cheap debt consolidation loans alternatives:

1. Other ways to acquire funds to pay debt off immediately.
2. Other approaches for dealing with the problem of Debt and Consolidation.











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