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Interest Loan Low - Low Interest Loans: Know the Good Debt Consolidation Moves

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The term “debt consolidation” has become very familiar to many of us and nearly every day we are bombarded with regular mail from credit organizations offering low interest loan deals for those with credit card debt.

Before we consider the best debt-consolidation moves, there are three things you should know. These are:

a) Debt Consolidation Loans Are Not Easy To Find
Many people think that it is easy to get debt-consolidation loans. This is however untrue. If you are looking for a low interest loan but already have bad credit, you are in for a wild goose chase. While the easy-does-it loan by the consolidator may be attractive, it may come at very high interest rates, sometimes reaching over 25%.

b) Debt Consolidators Loans Come With Hidden Charges
Avoid the big consolidators who come in, reduce your monthly payments and offer lower interest rates all for a “one- time affordable payment.” The reality is harsh. Many consolidation firms impose a fee of usually 10% of your monthly payment and debit it to your current account or pass the payments along to your creditor. Moreover, some consolidators are notorious for making late payments and this impacts negatively on your credit report.

c) Don’t Get Trapped In Balance Transfers
Balance transfer cards offered at low interest are very popular nowadays. However, remember that the rates are only valid for a couple of months after which you will have to get another card. This frequent switching can pile up and start showing on your credit history, thus portraying you as a high credit risk borrower.

The above are the three common consolidator bad moves. On the other hand, there are some good debt-consolidation moves through which you can get an interest low loan.

Moves That Will Help In Your Debt-Consolidation Efforts
If you have some home equity, there are a number of low cost options that are pretty straight forward:

1. “Cash Out” Refinancing
If you have home equity, you can refinance your home for more than your debt amount and reduce your debt with the extra money. However, while y our interest rates will be low, the payment duration will be very long, sometimes stretching from 15 to 30 years. You will therefore end up paying a huge amount of interest over the years.

2. Take A Home Equity Loan
Home equity loans usually come at low interest and the interest paid is tax-deductible. A home interest low loan can carry a term of 15 years and you will have to pay an origination fee of $75 and over. Moreover, you will also have to cater for the cost of the title insurance and the appraisal.

3. Take A Personal Loan
If your credit is still in good standing, you can opt to take loan without providing collateral. Financial institutions like credit unions usually charge lower interest than banks. Instead of the 20% plus that is charged by your credit card company, you can enjoy a rate of 11% to 15%.

4. Refinance Your Car
You can use your car to borrow a secured loan. However, the greatest risk is that you stand to lose twice if you won’t be able to service the debt. It may be impossible to get another car when your debt is more than the car you already have.

5. Ask for Better Interest Rate Terms
This can be easily done by calling your credit card institution and asking them for a better rate. Many people do not know that interest rates are not fixed and hence they settle for the first figure they are given. Most companies allow their employees to give lower rates to customers who inquire.

6. Non-Profit Credit Management Agency
Another option you have is to work with a non-profit organization that offers debt management services. A good example of such an organization is the National Foundation for Credit Counseling (NFCC). You can visit their offices or consult them over the phone. The organization has an interest low loan program that you can qualify for and you will be advised for free on how to reduce your debt.

To get an interest low loan, you have to know the bad moves to avoid and the good moves to make. Debt consolidation is not an easy task but with the right advice and approach, anyone can get free from debt.

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