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Low interest consolidation loans can help you get out of debt faster and save you money. Paying high rates means the total debt amount is constantly growing, and you’ll have more to pay off, which is why it takes longer and you lose money. Lowering that rate by even a few points can help you get out of debt faster, and consolidating makes it all more manageable by giving you one monthly payment to worry about.
While there are all of these great benefits to get these you’ll probably have to take some risks and consider a number of factors in your decision to make sure you get the best deal for you.
The first option for low interest consolidation loans is to get a secured loan using your home as collateral. This option can be done several ways. You can get a home equity loan, which means you borrow money that you’ve already paid on your home. Another option is to refinance your home, which means you get a brand new mortgage for your home, and you’ll get the money you have paid on your home to use to pay off your debt. This option does some larger upfront costs that need to be considered. No matter how you decide to do this, you will be putting your home in jeopardy. While you are paying off the money you’ve borrowed you can go on living in the home, but if you fail to make your payments, your home will be responded and sold off to make up the money you owe. If you decide to do this you’ll need to be very sure that you will be able to make payments.
Another option is a secured loan using your vehicle, jewelry, or other high valued collectible as collateral. Typically banks will only use real estate as collateral, but there are many other lenders available to work with, especially online. When you have collateral the lender knows they’ll be able to get their money either way, which means your credit comes into play less, and it means you will be offered a low interest consolidation loan.
For some high rate debts when you don’t have collateral available to you it may be possible to find a lower rate on an unsecured loan, this especially true if your debt is with credit cards or payday loans, which have notoriously high rates. You’ll want to do a lot of shopping around to find the best deal.
A lot of people will advice you that the best way to get the lowest rate is to pay everything off with a new credit card that has a 0% introductory rate. I would like to warn you to be extremely wary of this option however, as if you haven’t paid your debt off before the introductory offer has ended the rate typically jumps up and you are back in the situation you are currently in. Also, this can significantly hurt your credit score on multiple fronts.
Hopefully one of these options will work for you to get a better rate as low interest consolidation loans can help you in multiple ways.
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