How do you consolidate debt

how do you consolidate debt

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Know the facts. Understand what you are agreeing to by selecting a ABSA home or personal loan debt consolidation. With these types of loan consolidations, you combine all of your debt, which makes it easier because you only have to make one payment each month. This will help in reducing the monthly payment and also decrease the amount you are paying in interest on your various debts. However, because you are consolidating your debt into one loan, you will be paying it out over a longer period so you might actually pay more interest altogether.

Evaluate your credit. After you have decided this is the right program for you, you need to check your credit score. Various websites offer free or low-cost credit reports. For example, try Equifax or freecreditreport.com. You need to review this to make sure there are no discrepancies on the report that you need to clear up before applying. ABSA typically requires credit ratings in the range of 700 and above to be approved for its home loan and personal consolidation programs, however this varies depending on an applicant's credit and work history (see Resources).

Start the process. You will either need to apply to ABSA to transfer your existing home or personal loan from your current banking institution or you will need

to increase your existing loan if you already have it with ABSA. This can be done quickly and easily online, or you can visit one of the bank's branches. It is recommended to complete the application online because it involves less paperwork, you can do it from home and you will usually receive a response much more quickly.

Evaluate the offer. After much nail-biting, you finally receive notification that you were approved for a loan debt consolidation. Before you agree, make sure the lump sum monthly payment will be less than what you are currently paying to creditors. Compare every detail down to the interest rate to make sure you are coming out ahead. ABSA will then take your monthly payment and use it to pay your creditors through a deal they have worked out with them.

Be proactive. Now it is up to you to make the monthly payments on time to improve your credit score and reduce your total debt. While this is a great solution to consolidate many debts into one payment, you also risk losing your home if you default on payment. You can usually miss one or two payments on a credit card with just a slap on the wrist and a late fee. However, defaulting on a home or personal loan can have much more serious consequences.

Source: ehow.com

Category: Bank

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