Before you make a major financial decision, it is extremely important to be clear about all your options. When money is involved, you don’t want yourself to get entangled into something that sinks you deeper into debt. Therefore, proper knowledge of debt consolidation options is important before you plan to consolidate your debt. Credit counselling Victoria BC companies can provide you with all the information you need. You can also look for such a company before filing bankruptcy Prince George.
Secured Loan – Basically, a secured loan is given to you when you place a valuable asset as collateral. This may include your car or house. Collateral serves as security if you are unable to make payments. This is also known as default. In case you are unable to make payments, the creditor can legally possess your car or house.
Unsecured Loan – On the other hand, an unsecured loan is given to you on the basis of your credit. However, interest rates for an unsecured loan are much higher than secured loans. This is because you are not keeping anything as collateral.
Banks & Financial Companies
Usually, a bank is the best option if you want your debt consolidated. If you have an account with a bank and you are able to deduct payments from it, interest rates will be quite low. However, your credit history can cause a major obstacle. If your credit score is low and the bank decides that you are not creditworthy, your application for a debt consolidation loan may be rejected.
Financial companies are organizations that offer all kinds of loans to business organizations and individuals. These companies are often willing to take more risk. In other words, they even offer loans to people with low credit scores. In exchange for the risk, financial companies charge higher interest rates.
In case the option of taking a debt consolidation loan from banks and financial companies does not work, you can take a home equity loan. Such loans are also known as second mortgages and they are secured. Needless to say, your house will serve as collateral. Although you may risk losing your home because of faulty payments, you can still enjoy some great benefits. First of all, it becomes possible to deduct interest payments on taxes. Secondly, you don’t have to pay a variable interest rate. With a second mortgage, you can pay a fixed interest.
Credit Card Offer
Last but not the least, when you wonder how to manage debt, you can look for a credit card offer. Credit counselling Victoria BC companies can guide you in the right direction. Using credit card offers to consolidate your debt is another good option. There are many credit card companies, which offer 0% balance transfer fees. In other words, you can bring over your old credit card debt without any charge.
There are many people who pay debts by jumping from one card to another. However, there is one important thing you need to understand. In order to make sure that your credit score is not hurt when you close accounts, you should ask the credit card company to report that the account has been closed on your request. Once again, whether you’re planning to file bankruptcy Prince George or consolidate your debt, you should look for a professional company to seek guidance.