The best ways of debt consolidation vary from one individual to another, depending on one’s financial circumstances and preferences. However, most people prefer consolidating their debts by starting with relatively paying low amounts, then with time, they upgrade to paying bigger bills until all the debt is paid off. Some people will prefer transferring balances from one credit card to another or get consolidation loans. This is risky because when you are required to borrow extra money, you will need to use the accounts with zero balances making the debt overgrowing. And when it comes to debt consolidation, here are some tips and tricks to help you aid the process.
Borrow from family and friends
It is among the easiest ways to consolidate your debts; you can borrow a sufficient amount from your relatives and friends with a promise of paying later. However, this might not be easy as it might seem; it also depends on several factors such as your trustworthiness, your closeness to the potential relative or friend to lend you money, and the flexibility of payment terms. Consider sitting down with your lender and discuss your budget plans on debts and the installments you will pay back with or the interest. In this case, you should ask for financial help from only financially stable friends and relatives.
Personal loans
It is another more straightforward way of consolidating debts; personal loans are by banks or credit unions, where one borrows a specific amount of money and makes an agreement of paying back within 12 and 60 months. Personal loans usually have fixed interest rates. They tend to vary depending on the repayment period and the size of the loan, collaterals do not back them, and therefore they are unsecured debts. Consolidating debts with personal loans means borrowing money from a bank or a credit union and use it to pay off your credit cards and then consistently make monthly payments to your lender.
Final thoughts
There are several ways to consolidate debts; however, each mode has its positive and negative sides. It is essential always to choose the method that perfectly suits you and is within your budget; this will avoid the chances of getting yourself into more debts. When you have more debts, your properties can be mortgaged or auctioned. It is also vital for one to go for credit counseling to get proper advice on the best options and the interest rates that will not leave you bankrupt for the rest of your life.
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