While there are many ways how to do debt consolidation, each of the processes requires transferring the debt. This article will discuss three methods of transferring debts, namely balance transfer credits, personal loans, and home equity loans.
Balance transfer credits
This method is an apt way to merge credit card debt. Under this scheme, there are special promotional rates that include 0% APR. This, though, will only last for about 12 to 18 months after the application. Do not fret, however, because the request can be made online and in the comforts of your home.
The only thing you need to do under this method is to tell the new credit card company how much debt you want to transfer to them. According to the websites of most companies who offer this method, they are the ones who will determine your debt transfer cap. This is a win-win situation because the balance transfer fee is only 3% of your total debts.
There are different ways to apply for personal loans. The most common forms include local and national banks, online lenders, and peer-to-peer lending networks. This method is much cheaper compared to credit cards.
In essence, personal loans can offer payment terms from 24 months up until 60 months. However, it is the discretion of the debtor which to have. But the basic principle here is the more extended mode of payment you choose, the higher the interest rate. So, most companies advise their clients to choose 24 months.
Home equity loans or lines of credit
In this method, you are allowed to transfer debt from one lender to another. The rule of thumb here is if you owe less on your home than it is worth, you are eligible to get equity against it or borrow money from the bank. You have to decide, though, whether this is for you.