Getting Debt Relief Without a Loan
Looking for a loan to help cope with debts? Many people faced with high interest credit cards often consider taking out a loan to get "relief". In many cases, this may be a poor decision, so think twice before you take on new debt to payoff existing debt! There are other proven debt relief options:
For consumers whose unsecured debts, like credit cards, store cards, medical bills, etc. have gotten out of control, there are often other options available to get relief from debts, without a loan.
See how debt relief can help you. Answer a few, simple questions to get a free debt relief estimate and savings analysis - at no cost to you.
Before we review the most common types of debt relief loans, here are a few things to consider before taking out a personal loan:
- These loans all too often include very high interest rates
- They could if secured by collateral put your home or other assets at risk if you fall behind on loan payments.
- Some loans have special penalties which include interest rate increases to very high levels should your payments be late.
Clearly, taking on additional debt to attack existing debt is something that should be avoided except in situations where you can truly reduce your interest rate and will have the income and discipline to remain faithful in your repayment of debt.
A personal loan, also known as a signature loan,is often made in order to consolidate debts, or used for other personal uses.
Personal loans can also be used to establish consumer credit. Normally, personal loans are unsecured, not backed by tangible collateral or assets, and are based on the financial reputation and integrity of the borrower.
A signature loan is a loan that is not secured by collateral. In short it's a personal loan that's approved primarily upon the borrower's credit score or credit rating, i.e. the past credit history of the applicant.
An unsecured loan, also referred to as a signature loan, is based only upon the debtor's good name and trust that the debtor will repay the note as promised.
It's not backed by collateral such as a home, car, or any other asset that can be forfeited in the event that the borrower defaults on the terms of the loan.
Debt Consolidation Loan
A debt consolidation loan is a loan that typically combines or "consolidates" several higher interest rate loans, or debts, into one lower interest rate loan.
While debt consolidation loans are an accepted debt relief option, remember these loans do not wash away debts per se. Instead, they simply shift debts around. Debts will still have to be repaid.
In addition a debt consolidation loan may be stretched out over a longer period of time, making it easier to live with the monthly payments.
Regardless of the benefits that consolidation loans offer, you need to be careful before moving forward with loans to payoff existing debt.
Because statistics show that many people who use debt consolidation loans to payoff credit cards and other unsecured debts end up quite often falling back into the debt trap again.
When this occurs the debtor now has the debt consolidation loan to payoff on top of new credit card debt!
Explore your debt relief options. Request a free debt relief estimate and savings analysis, at no obligation to you.
Home Equity Loan
A home equity loan is a loan based on the total amount of equity you have in your home. This loan may be a viable debt relief option because it could allow you to use the equity you have in your home to payoff high interest rate debts.
It's fairly easy to determine the equity that you have in your home. Here's how:
- Take the current market value of your home
- Subtract the outstanding balance due, or principle, you have remaining on your home.
- The amount remaining, roughly speaking is the amount of equity you have in your home
Be careful about using a home equity loan to consolidate and pay off higher interest debts such as credit cards, retail charge cards, and other unsecured debts.
If you fall behind on payments, you could by trading unsecured debt for secured debt be placing your home at risk.
Lines of Credit or Credit Lines
A line of credit is an amount of money that you may borrow as needed. In this way it provides a convenient source of available funds that can provide peace of mind.
You're only charged interest on the amount of funds that you choose to draw from your approved line of credit amount.
In the case of a home equity line of credit you borrow money based upon the amount of accumulated equity you have built up in your home.
Once your line of credit is approved, you may convert higher interest credit card debt into lower interest rate debt. However, keep in mind, as with other loans that are used to consolidate debt, lines of credit don't eliminate debt, they just transfer debt.
Bad Credit Loans
Bad credit loans are so named because the person who takes out the loan typically has a history of:
- loan default
- slow payments
- late payments
- partial payments
- exceessive debt relative to income
Additionally, others with little or no credit history may also be categorized as a "bad credit loan" even though they've not missed payments, etc.
Because of either a history of slow/late payments, etc. or though a lack of credit history lenders, banks, and other financial institutions recognize they're at a higher risk of losing the money being loaned.
As a result, these loans often may come at very high interest rates that can cause a borrower's debt to go from bad to worse.
Before considering a bad credit loan other debt relief options should be considered, including:
- debt management plans through credit counseling
- debt settlement plans
- debt negotiation
- debt mediation
Poor Credit Loans
Poor credit loans, commonly called Bad Credit Loans, are so named because the consumer's credit history commonly shows things like:
- one or more failures to pay back prior loans
- slow repayment of loans
- a lack of history in taking out and repaying loans
Because of this, the banks or financial institution granting the loan believe the debtor is more likely to default--or be slow paying--on this new loan, too. Thus, these loans are typically called, "Poor Credit Loans".
As a result the interest rates charged on these loans are normally quite high. For debtors who have a poor credit score, loans with bad credit often lead to a debt treadmill that becomes more and more difficult to escape.
Take Advantage of Debt Relief Options
Before you or someone you know pursues a poor credit loan, you really should explore other debt relief options! The Debt Relief Center can help connect you to debt relief providers so you can choose from several different debt relief alternatives including debt management through credit counseling and debt settlement. One of these alternatives may be right for you and allow you to regain financial freedom without a loan.
Regardless of the debt relief option you may choose, make sure before enrolling with a debt relief company that you clearly understand the actual savings you could experience with debt relief, the time it will likely take for you to realize those savings, and the impact that a particular debt relief program could have on your personal credit.
To find the debt relief option that's meets your needs, take a moment to list the type of debt and the amount of debt you have, and the Debt Relief Center will connect you to debt relief providers who may have a debt relief option to meet your needs.
Request your free debt relief analysis and savings estimate in minutes. Start by answering a few, simple questions here.