3 Debt Consolidation Strategies you Should Avoid

In case your credit card dues have accumulated over time, then you have most likely thought about debt consolidation. Most people result to debt consolidation to ensure that they only make lower monthly payment. You can choose some good ways of consolidating your debt, for example, through mortgage refinance and home equity credit. However, there are also other bad ways that you can also opt to consolidate the debt, but ensure that you understand the traps and try to avoid mistakes that can turn out to be more costly than anticipated.

last updated Wednesday, May 17, 2023
#Debt Consolidation Strategies #HARD MONEY LOANS

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John Burson

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Hiring Debt Consolidation Firms

There are several debt consolidation firms all over the country. These companies often target people that are desperate and in bad monetary situations. Such companies will promise you that you’ll make huge savings and reduce your debt. However, in the real world, this cannot be possible. Therefore, most of the time, hiring such companies won’t benefit you. These lenders are costly, and you can do the same work free of charge by investing more time and being persistent. Remember that debt-consolidating companies aren’t free and will make promises that aren’t reasonable. Instead, consider credit counseling which can sometimes be free or inexpensive by not-for-profit firms that can assist you with making repayment plans and budgeting.

Commercial Hard Money Loans

Commercial hard money loans are either personal loans or mortgages secured using collateral. You must make a substantial down payment or provide collateral for a real estate property, car, or jewelry. Commercial hard money loans have high-interest charges. Because of the high-interest rates, you will most likely be unable to pay the principal amount (defaulting), and when in such a situation, you’ll lose your collateral. However, commercial hard money loans are sometimes beneficial because no credit is required. But this type of debt consolidation should be avoided.

Balance Transfer

Credit companies will compete for your business if you have credit card debts but make prompt payments. Although they may give you great introductory rates, sometimes with 0% interest rates, they will quickly increase until you cannot pay the monthly payments. There is a 3% to 4% transfer charge, which means the 0% rate is inaccurate. You won’t pay off your debt even with the 0% introduction rate and pay more in the long run.

 
 
 

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