What is debt consolidation?

Debt consolidation Arlington generally takes the debt you owe to some creditors and replaces it with one, lump-sum debt, owed to a single creditor. Debt consolidators “pay off” your debt, and then offer you one payment at a new interest rate through a consolidation loan in Texas. So instead of paying several creditors throughout the month, each with their interest rate, you pay one bill to the consolidator.

Debt Consolidation Arlington is often confused with debt settlement because both generally involve consolidation. Debt consolidation consolidates your debt, whereas debt settlement involves a single monthly program payment. The former removes your old creditors and interest rates from the equation, while the latter keeps them in place. Both methods of debt management will reduce the number of different payments you make throughout the month.

Secured vs. Unsecured Debt Consolidation Arlington

Did you know that debt comes in two types: secure and unsecured?
Debt comes in two types: secure and unsecured. Secure debt involves some form of collateral, like a house or a car. Unsecured debt includes medical debt, credit card debt, and

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some loans. In most cases, a debt consolidator will require collateral before your debt can be consolidated. It’s important to know that tying collateral into a consolidation can put that collateral at risk if you fail to make payments. As a homeowner, you can refinance your mortgage and use the equity from your home to help pay down debt through consolidation. When you collateralize your home or car, you agree to the forced sale of that collateral to pay back the loan if you stop making payments.

The benefit of having collateral is you can often get a lower interest rate–depending on the value of the collateral of course. In a down economy, lenders are generally more willing to make consolidation loans to those that can offer more than just a promise to pay the money back. Each case is unique however, just because you have a home or multiple vehicles as collateral doesn’t mean you will get the lowest available rate.

It is possible to get an unsecured debt consolidation loan in San Antonio, but it requires good credit history, verifiable employment, and a relatively low debt to income ratio. Some lenders even require a minimum credit score. There are several lenders out there offering consolidation services, and some have higher requirements than others. If you have a great credit score, an unsecured debt consolidation loan could result in a lower interest rate. Be wary of lenders that will approve anyone, no matter their credit history. Those consolidation loans often rate, which can lead to much more debt over time.

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IS DEBT CONSOLIDATION RIGHT ARLINGTON FOR YOU?

Debt Consolidation Arlington n is not right for everyone. The circumstances surrounding your debt are unique, as is your debt solution. If you have good credit and/or collateral, and you’re confident you can make your monthly payments, consolidation could be right for you. The benefits of Debt Consolidation Arlington include a possible lower interest rate, one simple payment to one creditor, and the possibility to pay less over time thanks to that lower interest rate.

There are some risks to consolidation, and you should consider those before getting involved with a lender—you cannot un-consolidate your debt. If you tie in collateral, and you fail to make payments, you could lose that collateral, and your credit score could take a big hit. If your only option is unsecured debt consolidation, and you don’t have a good credit score, your consolidated interest rate could be as high, or higher than some of the interest rates you’re currently paying.

Remember, there are a variety of consolidation services available, so you may have to search to find the one that’s right for you. There are several other ways to manage your debt that don’t involve consolidation. Call today and talk to a debt specialist to learn about other debt solutions, like debt settlement, debt counseling, and more.

Sample Consolidations

Let’s say you owe $5,000 on three different credit cards, each with different interest rates. If you got a secured consolidation from your bank for $15,000, you could lock in a lower interest rate or a rate that averages the three debts into something ultimately lower. For instance, your three cards could be at 24, 19, and 26 percent, and the bank could offer you an interest rate of 20 percent, or maybe even something lower. Depending on the amount of time it takes you to pay your bank back, as well as the size of each payment, you could end up paying less than what you owed because of the lower interest, but only slightly—your overall debt amount will likely remain the same.

Now bump up those totals by $5,000 each. Now you owe $30,000 across three credit cards and your interest rates are the same as above. This time, you can’t get a secure consolidation—either your credit score is too low, or you don’t have enough home equity. You manage to get an unsecured Debt Consolidation Arlington, but the interest rate is higher 25 percent. The consolidator eases the sting of higher interest by offering lower payments. That rate may still be lower than some of your credit card rates, and you may even pay less, but if it takes you longer to pay off your consolidated loan, you’ll end up paying more over time.

Get your risk free, no-obligation Debt Consolidation Arlington with a debt specialist – Call 1-888-925-7445