Debt is such an ugly word, isn’t it? Nobody wants to hear it. Unfortunately, too many people today have experience with it firsthand. Whether you have a mountain of student loans that you wish you could forget about, car loans that keep piling up, or any other debt that nags you, it can be stressful trying to meet the minimum payments without missing any of the deadlines. Consolidating your debt is one way to get rid of these problems, because it eliminates the need to pay a bunch of different lenders.
First, what exactly does consolidation even mean?
Debt Consolidation Defined
To put it simply, debt consolidation means you get a new loan to help you pay off any debt you already have.
You are then only obligated to the lender who provided you the new loan, so you lower the number of payments you have to make each month to just one.
Where to Get a Debt Consolidation Loan
A number of companies specialize in consolidation. But there are also other options. For instance, you could consolidate your debt through a mortgage. Additionally, you could go to a bank or financial services company as well.
Should everyone consolidate debt?
No. Similar to any other financial decision, what’s right for you isn’t necessarily what’s right for someone else.
Yes, debt consolidation loans can be extremely beneficial—helping borrowers organize their expenses and save money—but these loans may not be worth it for some people, while others may not even qualify. The amount of outstanding debt you have may exceed the maximum (or minimum) a lender allows, or your credit score may not be where it should. We all know that our credit score plays a crucial role in our obtaining almost any type of loan.
The key is to explore all your options and then contact reliable lenders to ask about their specifications and what consolidating your debt with them would entail.
To learn more read our Ultimate Guide to Refinancing on Long Island.