Debt consolidation is achieved by consolidating all your small debts and repaying them with a larger loan. The advantage of consolidating your debts is this: in general, smaller loans are obtained at higher interest rates, while larger loans are obtained at lower interest rates. By consolidating (consolidating) your smaller debts and repaying them with a larger loan, you will benefit from a lower interest rate, which will reduce the amount of your monthly payments.
Where to get a consolidation loan with bad credit?
If you visit our site, you will find that there are many ways to get out of loans. In the first place, most of the time, you may consolidate loans.
Suppose you have a set of loans such as furniture, a vehicle and other assets; your loans are secured by the items you bought with your loans. However, if you have a lot of credit card debt, then your loan is unfortunately not guaranteed, which means that consolidating your debts will require a little creativity. Let’s discuss a few different methods you have to consolidate your debts.
1. If your small loans are secured by assets, you can consult a debt consolidation lender (such as a bank) or a mortgage broker who will find you the right solution for your debt consolidation.
2. If your loans are not guaranteed but you own or buy a home, you can use home equity to reduce monthly payments like this:
- First Mortgage: You can consolidate your debts with your mortgage. Suppose you are currently financing your loan for a 5 year term at a rate of 8%, you can repay the loan for your vehicle using your mortgage. The loan for your vehicle could be bundled with your mortgage, this way you will benefit from a lower interest rate. As mortgage rates are down in Canada, it’s a good solution for homebuyers who will get their first home! Currently, 5-year fixed mortgage rates are at 3%.
- Second Mortgage: If you already have your first mortgage, then you can consolidate your debts by obtaining a second mortgage from a second mortgage lender (usually a private lender). You will experience the same benefits as a first mortgage, including lower interest rates and lower monthly payments.
- Home Equity Line of Credit: Home Equity Loans are offered at low-interest rates because they are secured by the property. You can get a line of credit to pay off high-interest debt fairly quickly and easily from the moment you apply.
Another way to consolidate your debts would be to apply for consolidation services
You can apply for these services when your debt and the interest rates associated with it are negotiated down with your creditors. With a lower interest rate and a lower repayment amount, you’ll see your monthly payments go down considerably. This is a nice alternative to the options mentioned above. Speak with a debt specialist to determine which debt consolidation service is the most appropriate for your situation.