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According to www.forbes.com, almost 43% of the adults carry the credit card debt. Most people have the idea that if they are taking a loan, it is almost impossible to return the loan amount to the creditor. However, it is extremely important to understand that if you’re going into unwanted debt, it is not something that you need to be worried about, especially with all the debt relief options that are there. Implementing the payments for debt consolidation will help you to become free from all your debts within a stipulated time period. A debt consolidation payment will permit you to take interest rates, which are high and combine all of them into a single sum of low interest. Utilizing the important tools like debt consolidation calculators is a great option. The debt consolidation calculators will help in determining as to which loan option should be implemented on the basis of the requirements that you have.
Given below is a list of the four ways which you can follow in order to combine all the existing debt amounts into a single payment.
Opening the line of credit, which has an interest rate of 0%?
This will help in transferring all the debts into one single card, which is going to offer an interest rate of 0%, especially if you are paying the complete balance during the promotional period, which is allotted to you. This kind of consolidation needs an individual to have credit standing, which is excellent. It normally has a fee of balance transfer associated with it, and whether any interest has been obtained or not will be displayed after a period of 12-18 months. The debt consolidation calculators can help in determining the monthly payments.
Fixed rate debt consolidation loan
You also have the option of taking out the loan, which will assist you in clearing your debt amounts, irrespective of whether it is a student loan, a huge amount of debt on your credit card, etc. You can clear your loan amount with the help of certain installment payments on the basis of the period that has been agreed. Low rates of interests are given to those individuals who have high credit scores. Placing the current information related to your finances into the debt consolidation calculators, will definitely help in ensuring that you are on the proper track.
Home equity loan
If the equity of an individual’s home is determined, it can be useful towards clearing the existing debt amounts or making major purchases. A home equity loan will help in obtaining the loan interest, which is completely tax deductible. You will not be required to possess excellent or good credit score. This is also known to offer a low rate of interest in comparison to the other kinds of unsecured loans. If you find it difficult to complete all your payments within the proper time, it can lead to the foreclosure of the home.
Few factors that you need to consider prior to getting the home equity loan include:
- The total ratio between your debt amount and your income.
- Understanding that a home equity loan needs to be cleared within 10 years.
If you use the debt consolidation calculators, it will be easy for you to understand if the home equity loan is one of the best options that are available to you. Going through all the debt consolidation reviews is also a great idea.
401(k) loan
If you do not want to consider all the other options that are available for clearing your existing debt amounts, you can always use your money, which is there in the 401(k) plan, under the employer that you are currently working. It is true that this can have a huge impact on the retirement fund, but you can be assured that this is one of the most viable options, which is available to you. The loan will be cleared within the time frame of 5 years.
However, if you lose your job due to any reason, your loan payment has to be paid within a maximum of 60 days. This loan will not be considered on the credit report and it is also responsible for offering low rates of interests in comparison to the various other loans. You can use the debt consolidation calculators for determining whether or not, the 401(k) loan is the ideal option, which is available to you.
Qualifying for a debt consolidation loan
Before you are issuing any kind of debt consolidation loan, it is obvious that the lenders will be looking into numerous variables. The first and most important one is definitely the credit standing, which you have currently. Lenders are going to run the credit report, which will be responsible for depicting the payment history, including the total number of credit lines, which are open.
Another important factor that they are going to consider is income proof. Lenders need to understand that there is enough money for clearing the loan in the future. They are also going to cross-check the financial stability, review important details like the card cancellations, late payments, as well as the open lines, which have been initiated. These are normally used for determining the risk level within the portfolio. Lastly, they are going to look at equity. Any collateral, which you have, like the home equity loan, can assist you to qualify for the larger loans. The online tools like the debt consolidation calculators will help in providing insights regarding the ideal option of debt consolidation on basis of the financial situation that you are in currently.
Debt consolidation calculator
You can complete your calculation for debt consolidation on the reputed lenders’ sites. You will have the opportunity of placing the total loan amount and the APR, which is associated with the loan. A debt consolidation calculator is going to help in revealing the complete payment details when you are going to consolidate all the loan amounts into one loan.
Conclusion
Before you are clearing your withstanding loan amounts, it is significant that you conduct thorough research on all the options, which are available for you. Considering all the important factors like the credit card score, the current income, the financial changes, and more, will help you to determine the ideal debt consolidation loan for you.
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