Taking several credits at one go is probably the biggest financial mistake you have ever made. Spending the money is not as hard as paying it back. Lucky for you, there are several different ways you can pay back the loans without facing huge repercussions.
Here are some consolidation options you should consider to clear all your loans
Using a specialised company to consolidate your debt
Consolidation companies are created to reduce the number of debts among consumers. Their main services include dept consolidation and debt management. Working with debt consolidation companies will help create management strategies. When you are looking to consolidate your debt, what the company does is either pay all the debt and transfers it to their side or ask your lenders to clear or the debt while they transfer it to one main credit account.
The interest cost and other payments will be cleared and new rates can be charged on your other accounts. They payments you make to the companies are made in small monthly instalments that have a lower interest rate. This mode of consolidation gives you the chance to save more money and pay less on other charges. It will also help you regain your credits and create a better credit history.
You can do a credit card transfer consolidation
Having credits on several accounts will make it harder for you to complete all the payments individually. You are especially unlucky if the credits are not from the same company; you will have to deal with all the different charges on the interest rates and confusing deadlines. This can be solved by simply moving all the credits into a main card with nil interest rate charges.
This can only be effective is your finances and lifestyle are committed into clearing the loan. Credit companies will give you the transfer with a condition that you take a maximum of 6 – 8 months to clear the whole loan. If you do not make the payments on time, you will face serious penalties and end up paying more than you initially had in debt.
Consider the home equity consolidation
A home equity consolidation can only work if you have a perfect credit score and a large sum of equity on your real estate. It is taken out of your home equity then used as a form of collateral. In short, the equity replaces the debt.
The lenders will use this as a secured loan. They can offer you up to 80 % of the value of your home. The loans do not have a fixed payment rate since the value of your property will fluctuate according to the market prices. One main advantage of home equity consolidation is the low interest rates.
Taking a personal loan as consolidation If a lender can offer you enough money, you can use it as a consolidation. Personal loans should be paid back in a fixed period because they are unsecured. Lenders will impose fixed monthly payments to keep you in check. If you can make the payments, this consolidation plan is perfect