How To Repay Your loans With The Help Of Bill Consolidation
Do you have multiple debts/loans? Do you often miss out the due dates of your monthly bill/debt payments? If you answers to both the questions are ‘yes’, then bill consolidation is probably the best solution for you. You’ll be able to repay your debts with the help of a single payment every month.
Bill consolidation: How it functions
There are basically 2 ways by which you can consolidate your multiple debts. Each of the 2 ways is discussed below.
1. Consolidation loan
Are you wondering what is meant by a consolidation loan? It is similar to a personal loan that you take out from any lending institution. You can take out either a secured (By tapping your home equity) or an unsecured loan and pay off your existing bills/loans. Thus, the consolidation loan replaces all your outstanding bills thus making it easier for you to repay your debts. Moreover, the loan interest rate is usually lower than the sum total of your multiple bill payments.
2. Consolidation program
You can also take help of a consolidation program, which is equally effective in replacing your multiple monthly bill payments by a single installment each month. You’ll have to enroll yourself in a professional consolidation program, where the company will suggest you suitable ways to manage your multiple debts. At first, the company examines your financial status and communicates with your creditors to lower down the interest rates on your bills. It decides upon a monthly payment and gets it approved by your creditors. When your make the monthly installment, the company distributes it between your creditors as per agreed upon payment terms.
Bill consolidation program: Benefits
Bill consolidation program offers a number of benefits. Check out the benefits from the following lines.
• Reduced interest rate: Consolidation companies can negotiate and reduce the interest rates in a much better way.
• Reduced monthly payment: Your monthly payments get reduced with the reduction in the interest rates on your bills.
• Peace of mind: You can enjoy a peace of mind as creditors and collection agencies will stop harassing you.
• Easier to manage: Your consolidation company takes care of your multiple bill payments.
• Improved credit rating: Paying off debt increases your debt debt-to-credit limit ratio thereby increasing your credit score.
Therefore, if you’re not able to consolidate debts on your own, then it is better that you take help of a consolidation program. Consolidation companies are quite experienced in consolidating multiple debts; therefore, they can negotiate with your creditors in a much better way.
How to select a good consolidation company
Though consolidation program offers you a number of benefits as discussed above, yet you need to very careful while choosing your consolidation company. It is really essential that you compare the rates and terms of various companies before you choose one. You should take advantage of the growing competition of consolidation companies. Make sure you check the status of your accounts every month; it’ll help you to rectify errors, if any.
Bill consolidation program is considered to be a much better alternative than consolidating your multiple bills with the help of a loan. Moreover, you have a chance of losing your collateral in case you’re not able to repay your secured loan on time.