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The Debt Consolidation Conundrum
By Cassandra_BHM | January 13, 2010
Literally millions of individuals all over the globe are stuck in the credit card trap; that is, the seemingly never ending cycle of making minimum payments on credit cards and never actually reducing their debt. If you’ve made the decision to free yourself of this “trap”, then you know that this is the beginning of a tedious and difficult journey. There are many ways to approach the situation, but for those who are struggling to make minimum payments on their credit cards, or using one card to pay off another, the options seem few and far between.
Debt consolidation is the act of obtaining financing from a lender to pay down debt from multiple creditors. In other words, taking your multiple credit card bills and turning them into one monthly payment. A debt consolidation loan will allow you to pay down your debt faster and sometimes with one lower monthly payment than you would have made on your numerous credit card bills. Given this win-win situation, you may be asking yourself why everyone with a heavy debt load wouldn’t consider using this method of debt repayment. The answer is quite simply bad credit.
For those with bad credit obtaining either a lower interest rate credit card or a loan from a standard financial institution can be virtually impossible. So what are people with bad credit who are swimming in debt to do? One solution that more and more people are turning to is a car title loan.
A car title loan is quite simply a loan that is secured based on the value of the borrower’s vehicle. Since the loans are secured, the borrower’s credit rating plays very little part in the approval process, so even those with bad credit can be approved. While the interest rates of these loans are typically higher due to the risk associated with providing loans to individuals with bad credit, they can still be of great help to those struggling to find a way to consolidate their debt.
First, because it is a loan, there is and end date, meaning the never ending cycle of making minimum payments on multiple cards can finally be broken. Secondly, since some lenders are flexible with their terms, you will likely be able to find a payment plan that can suit your tight budget.
By doing some research and finding a reputable lender you can find a debt consolidation loan that could be the solution that you’ve been searching for; a way to spring yourself free of the credit card trap!
Posted in Car-Title Loans, Credit Cards, Reducing Debt | | Print This Post |