You can learn here how to reduce your debt
Date: Mon, 09/05/2005 - 14:11
You can learn here how to reduce your debt
The credit card debt keeps on increasing if we fail to pay attention towards it. As a result, it becomes such an onerous concern that we find it tough to recuperate from it. The moment this starts happens, we need to take active steps so that it does not reach to the point of no hope.
We will be able to reduce the total amount of debt by diverting our attention on the rate of interest. This way, if we can transfer our debt to a lower rate of interest loan, we will be contributing more towards the principal amount and saving thousands of dollars during the tenure of the loan.
Let us take a hypothetical case to justify this fact. I have a credit card with a balance of $5000 dollars. My bank offered me an interest rate of 17.5%. With this calculation, I can make a minimum payment of $150 and this will take 3 years and 10 months to pay the complete amount of my debt. In the present scenario, the total accrued interest will amount to $1, 846. I was just thinking to transfer the total amount of my debt to a loan with a lower rate of interest. If I take a loan of 7% on the same $5000 paid in the monthly increments of $150, I will realize that it will be paid off in 3 years and 2 months. This will help in reducing the amount of interest to $564. This will help in a saving of $1,282.
This is one of the many examples of how the rates of interests help in lowering the total amount of debt. Though there are specific advantages and disadvantages to every aspect, but a proper education will help in choosing the one which is best designed to our needs.
Consolidation program:
This program helps in combining all the debts into one loan amount. This program makes your repayment process easier with your creditors by eliminating all the financial charges and the late fees. Make sure that when you choose a consolidation program, you should be able to see the positive results of it in your credit scores. Most of the consolidation companies send their payments at the beginning and in the middle of the month, the consultant amicably should work with your creditors to get the dates of payments changed so that it does not show up as late payments on your report.
Credit based on home equity
You can obtain this credit against the equity in your home. This way, you are keeping your home as collateral. If you are unable to repay the loan with the interest, you will be losing your home.
This credit is calculated by getting the difference from the home's appraised value and the balance owed on the mortgage. It is also dependent on your income, credit history and the additional debt load. This credit offers a lower rate of interest and during this time if you decide to sell your home, you will have to pay the loan immediately.
Conclusion
In this article, I mainly stressed on how to lower the rate of interest when you result in defaults. You should do a proper research on all the available options before making serious decisions.
One more thing that I need to add here before you approach your lenders. It is very important to know your credit file before you apply for any loan. Please order your latest credit report from the three bureaus to know the latest financial standing. This report will show you the credit scores which exactly will be viewed by your lenders. Make sure that you have highest credit scores to get the lowest rate of interest.
Regards
Roxette
The credit card debt keeps on increasing if we fail to pay attention towards it. As a result, it becomes such an onerous concern that we find it tough to recuperate from it. The moment this starts happens, we need to take active steps so that it does not reach to the point of no hope.
We will be able to reduce the total amount of debt by diverting our attention on the rate of interest. This way, if we can transfer our debt to a lower rate of interest loan, we will be contributing more towards the principal amount and saving thousands of dollars during the tenure of the loan.
Let us take a hypothetical case to justify this fact. I have a credit card with a balance of $5000 dollars. My bank offered me an interest rate of 17.5%. With this calculation, I can make a minimum payment of $150 and this will take 3 years and 10 months to pay the complete amount of my debt. In the present scenario, the total accrued interest will amount to $1, 846. I was just thinking to transfer the total amount of my debt to a loan with a lower rate of interest. If I take a loan of 7% on the same $5000 paid in the monthly increments of $150, I will realize that it will be paid off in 3 years and 2 months. This will help in reducing the amount of interest to $564. This will help in a saving of $1,282.
This is one of the many examples of how the rates of interests help in lowering the total amount of debt. Though there are specific advantages and disadvantages to every aspect, but a proper education will help in choosing the one which is best designed to our needs.
Consolidation program:
This program helps in combining all the debts into one loan amount. This program makes your repayment process easier with your creditors by eliminating all the financial charges and the late fees. Make sure that when you choose a consolidation program, you should be able to see the positive results of it in your credit scores. Most of the consolidation companies send their payments at the beginning and in the middle of the month, the consultant amicably should work with your creditors to get the dates of payments changed so that it does not show up as late payments on your report.
Credit based on home equity
You can obtain this credit against the equity in your home. This way, you are keeping your home as collateral. If you are unable to repay the loan with the interest, you will be losing your home.
This credit is calculated by getting the difference from the home's appraised value and the balance owed on the mortgage. It is also dependent on your income, credit history and the additional debt load. This credit offers a lower rate of interest and during this time if you decide to sell your home, you will have to pay the loan immediately.
Conclusion
In this article, I mainly stressed on how to lower the rate of interest when you result in defaults. You should do a proper research on all the available options before making serious decisions.
One more thing that I need to add here before you approach your lenders. It is very important to know your credit file before you apply for any loan. Please order your latest credit report from the three bureaus to know the latest financial standing. This report will show you the credit scores which exactly will be viewed by your lenders. Make sure that you have highest credit scores to get the lowest rate of interest.
Regards
Roxette
Thanks for all of this very helpful information, Roxette! I'm ce
Thanks for all of this very helpful information, Roxette! I'm certain it will be a BIG help to newcomers and those looking to out of debt in an easy way. Thank you for including examples as well!
