One thing a person might consider to stop needing a cash til paydayloan, is looking into debt consolidation. Below we have listed the benefits of debt consolidation and the types that are available.
Benefits of Debt Reduction Services
- Frees you from high APR (APR is either 0%, or very low).
- You only have to write one check per month for all your bills.
- You avoid the black marks of unpaid bills on your credit history.
- You get monthly progress statements on your debt consolidation.
- You can now pay down your debt balances where you could not before.
- Credit counselors can assist you and give you advice as part of the program.
- Credit card companies are willing to drop the interest rates to 0% to get their money back.
Types of Debt Relief
There are 2 major tools of debt relief to help you get out of debt. There are debt consolidation loans, and debt consolidation services. They are both described here:
Debt Consolidation Loans:
A lender lends you money to payoff your bills. You payoff all your credit cards and other debt, now your payments have all been consolidated into just one monthly payment to the lender, hopefully at a lower average APR than your current bills. Most debt consolidation loans are given in the form of home equity loans. Some are personal loans at extremely high interest rates, which we don’t recommend because you are trying to get out of debt, not deeper into debt. Technically, since you are borrowing more money, you’re not really getting out of debt, you just created more debt, but hopefully at a lower APR to pay your bills off faster.
Debt Consolidation Services or Debt Reduction Services:
You can think of consolidation plans as a “bill paying service” that has the influence to work with your creditors to reduce or eliminate your interest and late fees, and agrees to send them your payment every month. Most reduced interest rate consolidation programs get you out of debt in 48 months. These debt management plans help you get out of debt, and are usually for people who need debt help. If you don’t have a home with equity or your credit rating is not good enough for a consolidation loan, a good alternative is called a debt consolidation plan. You in turn pay the “bill paying service” a monthly payment which they use to pay off your debts to each creditor, plus a service fee, and maybe some interest if they could not get all of it removed. This should hopefully cost much less than your total payments before, since most credit cards will drop the interest rate from 21% to 0. This is what allows you to rapidly pay off the debt. If you’re in bad debt, it’s the interest that’s killing you in addition to the principle that is owed. You’ll be debt free in good time.