Finance

How to clear your debt in 6 months?

Life is all about uncertainty. Sometimes, we are prepared for all the goods and bad, and sometimes we are taken by surprise and find ourselves on the floor. But that’s okay till we can still stand up again.

Try doing the following alongside a debt consolidation to speed up your repayment

  1. Declutter and sell everything that you have not used in the last 3 years.
  2. Start a side hustle to earn more
  3. Make bulk purchases
  4. Use thrift stores
  5. Make your meals at home
  6. Stop all subscriptions you are not using

Debt consolidation means you take another loan to pay ongoing loans or overdrafts in your name and end all the payment obligations. You will only have one obligation to deal with.

Taking properly planned debt consolidation loans will no doubt make your life more sorted and easier.

Debt Consolidation Loans: One of the Best Solutions?

We live in times wherein the cost of living is expensive. It is easy to understand that with wage cuts and inflation speeding up, people fall into unmanageable debt.

Perhaps this debt would not be so unmanageable and growing at the speed of light if only one could keep track of every due date and progress details. It will surely take a lot of time and efforts to keep track of all of these with multiple debts.

Debt consolidation is the solution to this problem. If you were managing your monthly payments timely, then you might have improved your credit score by several points. With that shiny new credit score, you would be able to get a low-interest debt loan.

Do the following calculations beforehand to make an efficient decision:

  1. How much total debt do you owe?
  2. Which debt has the longest term, and which debt has the farthest repayment date?
  3. What will be the total early repayment charges?
  4. Total monthly payments.
  5. Total interest payment.

Debt consolidation will help you manage your finances better and improve your credit score.

How to get a low-interest debt consolidation?

Debt consolidation loan (UK) lenders charge you interest based on the following factors:

  1. The risk involved in lending you money
  2. Repayment ability
  3. Credit utilization ratio
  4. Credit history and credit score
  5. Loan Term and loan amount

To get a low-interest debt consolidation loan, all you need to do is prove to the lender that the risk in lending money to you is minimal. Here are a few points you can follow

  1. Get proof of regular income
  2. Work actively to improve your credit score
  3. Make timely payments – if you miss a monthly payment, you will lose at least 80 points from your credit score, no matter how small is the payment.
  4. Avoid making any credit application for at least 6 months – you will earn 50 points just like that.
  5. Start side hustles for more income to improve your debt to income ratio
  6. Check all your documents and credit reports for mistakes and get them corrected as soon as possible.
  7. Keep at least 3 weeks between 2 applications when applying for debt consolidation.

Different types of debt consolidation loans (UK)

There are 4 types of debt consolidation available. Know your options before choosing.

  • Secured loan consolidation

You can get a debt consolidation loan secured against a property or your home. This type of loan is also known as a homeowner loan. If you have a low credit score, then using collateral will help you get a low-interest rate.

  • Personal loan consolidation 

An Unsecured personal loan consolidation, as the name says, does not require any collateral. If you have improved your credit score, you might get a low-interest debt consolidation without any collateral. You can compare multiple lender’s offers at LoanTube by filling just one single application form.

  • 0% Balance Transfer card

If you owe a balance on multiple cards, transferring them to one single balance transfer card can make things easier for you. With a 0% balance transfer card, you will not have to pay any interest on the amount borrowed for a few months. But be aware if you skip repayments, you might be charged late repayment fees, and your 0% offer will also stand void after one default.

Always check the transfer fees. Some transfer cards actually have a low APR for the debt term rather than a 0% interest rate; check which one will be a better option for you.

  • Debt consolidation with guarantor 

Debt consolidation with a guarantor simply means unsecured debt consolidation co-signed with a guarantor. The guarantor will be obliged to pay for you only in case if you don’t follow up with your obligation of repayments. If the guarantor also falls back on repayments, this will be added to their credit reports. The lender can take legal action against you and the guarantor both.

Tips to follow to pay your debt ASAP

  1. Know where you stand- Check all your accounts and your credit report.
  2. Revisit your monthly expenses and income statement and divide the expenses into necessities, debt payments, General expenses and expenses that you could have avoided.
  3. Apply for debt consolidation. It might get lower monthly repayment and save some more bucks.
  4. Revise your budget: keep necessities and debt payment in priority.
  5. Ask your friends or family to be your accountability partner.
  6. Check if you are eligible for any govt allowance.
  7. Check if you have any credits left in your previous electricity account.
  8. Compare and switch your energy provider or bank account to save money.

Conclusion

Clearing your debt within 6 months is surely a challenging goal but not an impossibility. A Debt consolidation loan will surely help you organize your payment and make your life easier. Just make sure to do proper calculations before applying for debt consolidation, follow through all the monthly repayments timely.

Visit LoanTube for a debt consolidation loan.

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