Should You Consider Debt Consolidation?

Sometimes it's difficult to keep up with your finances, especially during unforeseen circumstances or life-changing events. Things like loans and credit cards can make your life easier- or not- depending on the situation. Thankfully, there are some ways you can consolidate your current debt without digging the hole deeper. If you're struggling with medical bills, student expenses, or any kind of loan payments, here are some options to help lighten your load.

Personal Line of Credit
Personal Lines of Credit, sometimes referred to as PLOCs, can be a great way to consolidate debt with a likely lower monthly payment. These revolving lines of credit work similar to a credit card but have a larger sum available for use. Not only are interest rates lower than a credit card and payments more affordable, they can also earn you credit too! These lines are typically set for only a specific term, which means once it's been paid off, you no longer have to worry about it unless you choose to renew it.

This can be a great option in taking care of debt, as it may be easier to repay, and the funds are immediately available once the line is in place. And as long as your payments are timely, you can raise your credit score at the same time, hitting two birds with one stone!

Credit Cards
Credit Cards can also be an option to assist in paying off debt. Though the credit limit is generally lower than a personal line of credit, it is something to consider nonetheless. Credit Cards with a 0% APR Balance Transfer option can help you consolidate numerous cards into one, lowering your payments and giving you time to pay it off faster. Granted, these offers are usually only introductory offers and will expire; however, they can really help you put a larger dent in your debt.

As an added bonus, some Credit Cards have rewards allowing you to earn cash back as you spend. For example, with a Credit Card like Levo's Better Rewards Visa® Card, you'll earn up to 3% cash back redeemable for cash, gifts cards, or travel. 

Home Equity Loans
Do you have equity in a home? Consider a home equity loan. This loan acts like a second mortgage where you borrow up to the amount of equity you own in your home. These rates are fixed and so there are no surprises if the market's rates change. You will get a lump sum allowing you to pay off all your debt, and consolidating it into one payment. The interest rate is lower than most credit cards and your monthly payments will be easier to manage. 

Be aware that a home equity loan uses your home as collateral, which means if you are unable to pay back the loan, foreclosure is possible. Be sure you are able to manage these payments.

Home Equity Line Of Credit
This type of credit line, often called a HELOC, works a lot like a PLOC. It's a line of credit that is more flexible than a regular home equity loan, allowing you to borrow as needed rather than all at once, using the equity of your home as collateral. Though this revolving line of credit normally has low rates, they are not fixed like a home equity loan and can fluctuate. 

There is also a risk for foreclosure with this loan if it is not able to be repaid, so please be sure to consult a financial advisor to ensure whether something like this will best meet your needs.

Title Loans
Like a home equity loan, a title loan is a secure loan that uses something as collateral, in this case a vehicle. Your credit history is usually not taken into consideration by the lender and this loan can be approved quickly, making it a good option for those who need relief from debt fast.

There are some things to consider before applying for this type of loan. The payments and interest may not be as affordable as other options, and if the loan is not repaid, your vehicle could be repossessed.

There are plenty of options for debt consolidation, though it's very important to weigh the pros and cons of each before settling on a decision. If you have concerns, we encourage you to speak to a professional at your financial institution before applying.