Subsidized and Unsubsidized Loans

by admin on February 18, 2014

There are many reasons why borrowers get into debt, including gambling, underemployment, complicated divorce, and others. There are different ways to reduce your interest rate or debt load, including consolidation and settlement. Borrowers usually consolidate unsecured debts such as loans and credit cards.

Helpful Tools

If you are not sure whether to consolidate or not, you can use an online calculator. Just enter all consumer, auto, and personal loan amounts and credit card balances. You are also asked to enter the yearly rate and monthly payment to get a current debt analysis. For instance, you have a student loan of $1,500 and the interest rate is 8.5 walletpercent. You have a second credit card with an outstanding balance of $600. The online calculator shows important information such as your monthly savings amount and total debt balance. If you choose to use the services of a professional instead, try to find a reputable provider.

Borrowers with multiple high interest credit cards benefit from debt consolidation if they transfer their outstanding balances to a low interest card. Balance transfer cards feature a low introductory rate within a period of 12 to 18 months. Another reason to consolidate is to get rid of debt faster – borrowers save money on interest payments. Borrowers save hundreds or thousands of dollars in taxes and interest charges. Borrowers improve their credit scores and are offered loans with attractive terms and rates. Borrowers can choose from other options such as individual voluntary arrangement, settlement, and negotiating with financial institutions. Bankruptcy is a last resort if you exhaust all other options.

Lower Payments

Applying for a secured loan is one way to lower your monthly payments. Banks also offer home equity loans to customers with poor credit In addition to the lower interest rate, these loans are easy to qualify for.  If a borrower defaults, the financial institution can take and sell the asset. Financial institutions also offer home equity lines of credit which can be used to consolidate debt or as a form of protection. The interest rate is lower compared to personal loans and credit cards. Some borrowers use HELOCs to consolidate credit card debt.

Student loan consolidation is a way to deal with excessive debt. It is a solution for health education assistance loans, subsidized loans, and others. You are allowed to consolidate once you drop bellow half-time enrollment. An income based repayment plan is one option for recent graduates. The term of the new loan is longer.

Related resources:

http://www.yourloan.ca/consolidate-loans–credit/

http://business.financialpost.com/2012/04/13/how-to-use-your-line-of-credit-the-right-way/

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