How Debt Consolidation Can Help You to Save

With the hardships of the current economic climate, managing your finances can be tough and with mortgage repayments, bills to pay, student loans, business loans etc, it’s easy to slip into debt. However, taking out a loan can help you become debt free as it allows you to pay off small outstanding debts affording you some breathing space.

If you have find yourself with a cluster of different debts and you’re struggling, merging them together into one loan to lower your monthly payments is often a sensible shout. Now you must borrow enough money to pay off all your current debts and owe money to just one sole lender. This is known as a debt consolidation loan and there are two types. The first is secured, with this, the amount you borrow is secured against an asset which is usually the property you own. The other type is unsecured and this loan is not secured against your home or any other asset. Tough before you take out either, you should seek free debt advice as they may not be right for you.

Consolidating debts makes sense if any savings are not wiped out by fees and charges that may incur and if you can afford to keep up payments until the loan is fully repaid. It also only makes sense if you are able to use it as an opportunity to cut your spending and get back on track and if you end up paying less interested that you were paying previously and the total amount payable is less. Before accepting a consolidation loan, shop around and use comparison websites to find the best deal and seek advice before any decision is made final. Don’t place your entire focus on the headline interest rate, compare this with the annual percentage rate or the same rate for secured loans as this will include extra costs such as the arrangement fee.

Generally, loans from credit unions are cheaper than loans from the majority of providers for smaller amounts and do not trigger set-up fees, administration costs or early redemption fees. Several credit union loans cost 1% a month on the reducing balance of a loan and by law, the amount of interest charged by a credit union can be no more than 3% a month.

Choosing the right option with the right repayment options for you will see your debt reduce in no time. Loan providers like SoFi offer a fresh and innovative approach to lending that is completely different from traditional brick and mortar lenders. The company was founded by four graduate students at the reputable Stanford Graduate School of Business in 2011, the group wanted to make a commitment to offering a service that would allow students pay back their loans whilst bypassing traditional lending institutions.

With this idea in mend, they moved to accommodate a wider variety of borrowing needs and ever since, they have stuck to their word and are now one of the fastest growing alternative lenders in the industry. The group have since extended over $7billion in loans and continue to offer a range of technology driven financial lending and money management solutions including wealth management loans.

The group also work with customers to help them achieve stability,plan for their future and reach their personal finance goals. One way they do this is by helping customers reduce their debt via their loans and over time, small balances will disappear one by one, freeing up money rid you of your larger debts before paying back your loan to Sofi, stress free.