When you’re looking for a practical means to get rid of your debts, you should think about bill consolidation. If you have a good credit score and you’re a homeowner, then you can consolidate your bills in different ways. Nevertheless, options are also available for individuals who have a less than adequate credit score and have no home equity to work as security or collateral.
What is bill consolidation all about?
Debt or bill consolidation is the procedure of merging all your debts into one. You can consolidate your bills through various options. You can go for a bill consolidation loan from a bank and use the loan proceeds to pay off all your dues. In return, you have to send one monthly payment to the lender. In contrast, you can go for a debt management plan (DMP) where you don’t have to take out a loan. You just have to make one monthly payment to the debt management company and the company would subsequently distribute it among your creditors and pay off your bills.
Are you eligible for online bill consolidation?
Secured bill consolidation loans would always ask for a collateral that is mostly your home. Unsecured consolidation loans are also available but they come with excessive interest rates and you must have a very good credit score to qualify for them. When you request for a consolidation loan, the lenders would instantly take into account your credit score and your capacity to provide a collateral. If you don’t have satisfactory credit and can’t offer a collateral, your loan application would be turned down. Luckily, debt management services are there to help you.
If you have a huge amount of debt which is difficult to handle on your own and you either don’t have a home or don’t want to risk your home, then you should go for a debt management program.
When you enroll in a DMP, the company would thoroughly assess your financial condition and gather details like the number of bills overdue and the amount of debt you have run up.
On the basis of these details, the debt counselor would start talking terms with your creditors for more affordable interest rates and a repayment plan would be devised that you can manage comfortably. The repayment plan would be spread out over a particular time frame of 3-5 years.
A DMP is not a loan and the companies offering these plans are ready to assist individuals with poor credit scores. When you get lower interest rates and monthly payments, you save money and your ambition of achieving financial independence becomes true.
Applying for loan consolidation
Online application facilities are available from almost every consolidator. Applying through the Internet is always simple and saves a lot of time. Think about the benefits of providing your financial details online since you don’t have to talk to a representative personally. You also have the chance of comparing rates and services of various consolidators.
Therefore, you can see that a DMP is a better option of consolidating your bills since it’s less risky.