debt consolidation explained the struggle to pay off debt can seem overwhelming especially
when you don't have the right understanding or options on how to tackle it in today's video we're
going to take a deep dive into understanding debt consolidation to help you make informed decision
here are the areas we'll cover in this topic number one what is debt consolidation number
two how does it work number three requirements for debt consolidation number four benefits of
debt consolidation number five how to consolidate your debt number six types of debt consolidation
and number seven the risk to consider remember to subscribe to my YouTube channel and click on
the Bell icon in order to be notified when I make further videos let's quickly Dive In number one
what is debt consolidation debt consolidation is a method of combining multiple debts into a single
loan or debt reconstructuring program through this approach you can reduce the total amount of
interest you pay as well as simplify the payments by consolidating them into one monthly payment
with debt consolidation you can get relief from the hassle of managing multiple debts
debt consolidation is available to individuals who are struggling with credit card debt medical
bills personal loans and more number two how does debt consolidation work when you consolidate your
debt you work with a debt consolidation company to combine all of your debts into one this company
will then work with your creditors to reduce the interest rates and create a new payment
plan that is more manageable for you the goal of debt consolidation is to reduce the amount of
money you owe each month as well as the amount of time it will take you to pay off your debt
in many cases debt consolidation can help you pay off your debts in as little as 36 months
which is three years depending on how much you owe number three requirements for debt consolidation
the requirements for debt consolidation vary from lender to lender depending on the type of program
or loan you choose you may need to have a good credit score or income generally speaking debt
consolidation loans require a minimum credit score of 670 and a debt to income ratio below 43 percent
the requirements may be different depending on the lender or provider so make sure to read the
requirements before applying number four benefits of debt consolidation with debt consolidation you
can simplify your payments which makes it easier to manage here is a list of the main benefits of
debt consolidation lower interest rates many debt consolidation programs offer lower interest rates
which can save you money in the long run reduced monthly payments consolidating your debt can help
reduce your different monthly debt payments to a single payment per month improved credit score
if you are able to pay off your debt on time and as agreed it can help improve your credit score
simplified payments with debt consolidation you only have to make one payment each month rather
than multiple payments to different creditors negotiated settlements many debt consolidation
programs offer negotiation services that may help you reduce the amount you owe check out
the list in the description area of some of the debt consolidation companies that we recommend
number five how to consolidate your debt if you're ready to take the plunge and consolidate
your debt here are some of the steps to get started number one compile your debt
gather all your bills and statements to calculate the total amount you owe who you owe and what
interest rates are associated with each debt number two compare debt consolidation companies
do some research to compare debt consolidation companies to know the programs they offer and
choose one that meets your financial needs after that fill out an application with a debt
consolidation company and submit your required documents remember that you have a list of some of
the debt consolidation companies that we recommend in the description area number three negotiate
with creditors after you are approved the debt consolidation company will contact your creditors
and negotiate a lower interest rate and a payment amount number six types of debt consolidation
depending on your financial situation there are several debt consolidation options to consider
One debt consolidation loans a debt consolidation loan is a loan that pays off all of your debts so
you only have one payment per month with a debt consolidation loan you can pay off your
debt faster and at a low-interest rate 2. debt management plans a debt management plan is a
program where you make one monthly payment to a credit counseling agency that in turn pays your
creditors these plans generally last three to five years and they can help you reduce interest rates
and simplify your payments three balance transfer credit cards with balance transfer credit cards
you transfer all of your debt onto one card with a lower interest rate of promotional period 4. home
equity loans with home equity loans you can borrow money from the equity in your home to pay off debt
7. risk to consider before taking a debt consolidation loan why debt consolidation can be a
great way to manage your debt there are some risks to consider before taking out a loan the fees
associated with debt consolidation programs can add up so be sure to do your research and compare
different options before committing additionally taking out the loan can also extend the amount
of time it will take to pay off your debt so make sure you understand the long-term implications of
the loan you could lose some special Provisions like grace periods if you decide to consolidate
your debt especially if it's a school loan if you want to consider that consolidation try to
check if you can consolidate your debt using a low interest credit card or a personal loan from
a bank in conclusion debt consolidation can be an effective way to manage your debt and
reduce stress it's important to weigh the pros and cons of taking out the loan before committing to a
debt consolidation program be sure to research your options and compare different programs so
you make an informed decision with the right approach debt consolidation can be a great
way to get back on track with your finances thank you guys for watching and bye for now.