Debt Consolidation - Pay Your Debts Back Wisely
are many ways to pay back debts and one such method is debt consolidation.
This means you take a bigger loan to pay off your many smaller loans but
you get into bigger difficulties. How would you avoid such situations?
If the loans you intend to take is for your housing also then, you can go in for a housing loan where rate of interest is lower compared to other loan schemes and you get tax benefits as well in many areas.
If you take loan for your housing project, you have to pay origination fee that is hefty, which if saved can be used towards other expenses. Before you complete the project, you have other expenses as well, like expenses towards appraisal of your home and insurance expense for the title.
If you find someone who can help you by giving personal loan at a lower rate then it brings down the bank loan and you end up paying much lesser for your home. This extra saving can be utilized for paying back other loans.
This gives you an opportunity to pay your new debt for some years, as it is more urgent than the previous ones. So you can utilize the next 10 to 15 years for repayment of your barrowings. But remember that throughout the years, the interest can increase a lot, no matter how small it is. So, do not let your debt be left forgotten. Somewhere in the future it will surprise you with your biggest problem.
However, the total amount by way of interest you have to pay over the longer duration is bound to be higher. Therefore dont take too much time in repaying the debt, as otherwise it will give you a surprise when at a future date you start calculating the total interest paid.
Besides your house, you may also use debt consolidation to refinance your car. This can be tricky as in the end you need to pay off an amount that is above what your car actually costs. A personal loan is another of your choices.
Other than the house, you may like to use debt consolidation for refinancing your car as well. Beware you may end up paying more than the cost of the car. You may think of taking a personal loan if it is workable. Debt consolidation can be done in order to help you have better credit standing as you will not be leaving debts unpaid. But, you need to make sure that you are not only getting more and more buried in debt.
You can think of debt consolidation so that you pay back the installments regularly to keep your credit standing in the market, but in the process ensure that you do not get into irrecoverable situations.
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