In times of financial problems, as we are experiencing at the moment, many individuals consider debt consolidation loans as a solution to their financial difficulties. An increasing number are struggling to service their financial commitments, and something must be done. So what options do you have? What is the best plan of action?
There are many alternatives to look at when you find yourself in need of debt consolidation. However, it often depends on your unique situation what is the best option. The ultimate goal though, is to increase your cash flow and affordability. If you in the end find yourself with only one debt, or bill, to pay, it will be easier for you to service and maintain a good payment profile.
So what options can you look at? If you are a home owner, the "cheapest" option is to make use of the equity in your property, and apply for a second home loan. With this type of loan, you will get a lower interest rate, and a longer repayment period. In effect you will have a lower monthly repayment, and very likely to be able to pay it off sooner.
This type of loan is viewed as a normal loan, and will not reflect in a negative way on your credit profile.
But what if you don't have equity in your property? Or if you don't own a property at all? There are alternatives.
One option would be to apply for one, larger personal loan. This would help with only having one payment at the end of each month, instead of multiple. It's also worth mentioning that a larger loan can often mean a better lending rate, in comparison with smaller loans.
If you find yourself in a situation where no financial institution is willing to grant you additional credit, don't just leave it. Make contact with your creditors, and explain the situation. They might be able to assist you with extending the loan term, or improve the interest rate you are paying. By doing this you also show your creditor that you are responsible and are willing to make arrangements to pay back the debt you have made.
