Avoiding Debt Consolidation Loans: 3 Alternatives

A debt consolidation loan is a common loan made to ease our debt payments. A debt consolidation loan is not the only way out of debt, there are a number of ways to get rid of the debt. 

1. Credit Card Balance Transfers

Using a credit card balance transfer is one way around obtaining a consolidation loan. To utilize this strategy you will need to apply for a credit card. The new card should have an introductory APR of usually, 0 percent.

Once you get the card, transfer all of your other balances onto the new card. This will effectively eliminate the high interest that you have been paying on your old cards. This will usually only give you 12 to 18 months of free interest, so you need to work quickly to pay off your debt.

2. Credit Counseling

A credit counseling program is another method to help eliminate debt. Credit counseling is similar to a consolidation loan except you are not actually borrowing any money.

A credit counseling company will set up a payment plan and negotiate a lower interest rate for you with your creditors. You will then pay the credit counseling company a set fee as well as your monthly payment and they will distribute it to your creditors. Typically, the consolidation will include one low monthly payment with a significantly lower interest rate.

3. Private Personal Loans

Private personal loans are another way to get rid of your debt. You can secure a private personal loan from a private party with a better interest rate than what most card companies offer. Also, you set up the repayment terms that work best for you.

 If you do not have anyone that you could personally borrow the money from, there are many private investors that would like to loan you the money. They typically charge a higher interest rate than you could get from a bank. However, if you cannot get approved by a typical lending institution, you could get approved by them. This is usually the most expensive option, but it can help keep you afloat if you need it.

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