What can I do to get the lowest rate on my debt settlement loan?

Question

What can I do to get the lowest rate on my debt settlement loan?

Answer

Debt settlement loans are one way to get out of the debt you are in. This type of loan is like any other. It is a loan given to you from a lender with the express interest of consolidating your debt into one larger debt to repay. The benefit of lumping all of this debt together is to pay less on it and to have just one payment to make each month. However, if you do not have an affordable interest rate on this type of loan, you may find yourself back at the start.

Finding a Low Rate

For many people, obtaining a loan to use for debt consolidation is difficult. If you have the opportunity to use this method to settle debts, do so wisely by considering the following.

  • Determine what your credit score is. Your credit score will be the largest factor in determining what you have to pay in interest.
  • Look at all fees involved, including loan origination fees, maintenance fees and other fees. Keep these as low as possible.
  • Consider tapping into a home equity loan, if you have equity in your home. However, realize that by doing this you are securing the debt to your home, potentially putting your home at risk if you default on the loan.

Taking all of these things into consideration is important. However, keep in mind that not all people will find that this is their best option. Debt settlement, for example, may be another option.

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