When looking at the best ways to consolidate debt, there are numerous options available to those considering such a path. `It is a viable method of reducing interest and other charges if used correctly. We took a look at your options.
Debt Management Programme
The intention of a debt management programme is to establish a monthly payment regime that reduces interest rates on your debt. And does this with a manageable monthly payment that does not leave you struggling to cover essential costs. Many companies offer such programmes, as do the government. You may see it referred to more commonly as a debt management plan. You can reduce your debts significantly by agreeing a repayment schedule, but naturally this will leave a mark on your credit report for many years. However, enrolling in such a programme will prevent creditors contacting you to chase debts. The plan may also come with its own charges, so you must do the maths, Work out whether financially it is worth you proceeding.
The Best Ways To Consolidate Debt – Loans
Naturally we will suggest that a loan is a plausible option for those looking to consolidate debt. These loans, which don’t require collateral are available through banks, credit unions and a variety of online lenders. And brokers like us! We collate all the best lenders on the market in one convenient location to take the hard work away from sourcing a loan. Loans may allow you to source lower interest rates compared to what you currently get charged on existing debt.
The Best Ways To Consolidate Debt – Credit Card Balance Transfers
Utilising credit card offers is a key way to consolidate debt, and the best type of offer for this is a balance transfer. If a card issuer accepts you for a card, you can move across other debt from multiple sources. Then you have an agreed period when no interest is charged on the balance of the card, giving you time to pay off your debt with less stress. There will almost certainly be a one-off fee involved when taking up the offer however. This is likely to be a set percentage of the amount you move across onto the card. Some of the current offers allow for very long zero percent interest periods. This makes suffering the initial fee more than worthwhile as it is much less than the interest charges you would have paid instead. Such a move is also far more convenient. Many find it much less stressful to have debt on one account, rather than spread across various cards and bank accounts.
Peer-to-Peer Loans
Peer to peer lending is an alternative form of personal loans and sometimes a very good option. It is a good option as it can offer excellent interest rates on many occasions. How it works is this. It connects individuals loaning money directly to borrowers with no middle party involved. This cuts out extra costs, allowing for competitive rates. And allows for individuals to offer these rates as they see fit. Investors look to make profit, but not on the scale of normal lenders. A streamlined and online process benefits all parties.
Remortgage?
Generally people use this option to renovate their home or deal with an important big cost that allows them to invest the large lump sum into a project or property. It is not generally utilised to consolidate debt, and you must tread carefully if you think this may be an option. The other options listed in this article are probably a preferable path for you to take.
Friends And Family
Ultimately, if possible, this is the best option. You avoid charges, you move debt to one place, then you pay off what you owe, and avoid large corporations, paperwork, credit checks and all the rest. Your debt will appear less on your reports too, which is good for your score. However, you must tread carefully. Only take this route if you are fully confident of making full repayments via the agreed schedule. Still write down an agreement of what is expected from both parties. You put personal relationships at risk if you fail to make repayments on time.
Conclusion
Bottom line? Choose one that provides peace of mind, that leaves you feeling comfortable that you can afford the payments and eliminates debt.
Then change your spending habits so you don’t have to make this choice again!
