Debt consolidation can be an excellent option when you find your
finances getting out of control. But before you go out and sign up
for a debt consolidation loan, here are the top 8 things to take
into account.

1) Consider selling assets to clear your debt. Rather than
rescheduling your debts, see if there is any way you can repay some
or all of your debts yourself. Sell unwanted valuables and other
items. Depending on the item you can sell to dealers, advertise in
local classified ads or through Ebay. Sell unwanted books through
Amazon. If your debts are very high and you own your own home
consider downsizing to release equity.

2) Pay as much as you can towards your credit cards. If you are
able to make your minimum credit card payments you should consider
how much additional money you can pay off each month. Reduce excess
spending wherever possible and pay as much as you can on your
credit cards. If you don’t settle for making just the minimum
payment, you can make a significant impact in your debt over the
course of 12 to 24 months. If your debt situation makes it
difficult to meet the minimum payment, a consolidation loan may be
easier for you to manage.

3) If you are a homeowner, you may be able to save on your
mortgage. Interest rates are historically low and by refinancing
your current mortgage you may be able to save hundreds of dollars
ever month. Additionally, you may be able to obtain additional
money that can be used to repay other debts. However, be aware that
there may be a prepayment penalty imposed by your current lender
when doing this. If so, a second mortgage may still offer a
reasonable interest rate while achieving a similar affect.

4) Consider a secured loan from a different lender. Missing and
late payments can have a very negative affect on your credit score.
This can potentially make your mortgage company hesitant to give
you a second mortgage. However, by getting a new lender and using
your house to secure the loan, you will likely be able to receive a
loan at a decent rate. However, only use your home to secure a loan
if you are positive that you can make the payments. If you miss
payments, the lender will quickly try to repossess your home.

5) Assets other than a home can also be used to secure a loan. If
you don’t own a home or any other real estate, but you do have a
fancy car or nice boat, it is possible to use these pieces of
personal property as security for a loan. It is important to
consider the interest rate on the loan though. A loan secured by
assets other than real estate typically has a higher interest rate.

6) An unsecured loan. If you do not have property or other assets
an unsecured loan is often a possibility. An unsecured loan is
usually over a shorter term, normally up to a maximum of 7 years
but occasionally longer. As a result the monthly payments will be
higher but the debt will reduce quickly. Because there is no
security expect to pay a higher interest rate, particularly if you
have a poor credit history.
Credit cards as an option. If you have a fairly good credit
history and your current debt is relatively low, you will probably
be able to apply for a credit card with 0% or very low interest
rate. A 0% interest rate on a balance transfer is a very good
option to a consolidation loan. Just be aware of any introductory
periods on the rate and be sure to pay off the balance in that
time.
Do your own research of the options. There are many possible
courses of action that you could take to get out of debt. Some are
better than others, some may be obvious and others can be
confusing. Thoroughly research the choices for your own situation
before making a final decision. Talking to different lenders and
banks may be able to help give you more information so that you can
compare your choices. Asking a bank for advice won’t commit you to
anything, but it might help you get out of debt.

For a great many people debt consolidation provides an ideal
solution to excessive credit card debt. Sorting out debt problems
takes a little time, effort and determination. Once you’ve sorted
your debts you will find life more enjoyable and relaxing and, with
no debt collectors calling or contacting you by post or phone, much
less stressful.

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