Living in a debt trap can be a nightmare. You may feel that it is impossible to get out of it and that you might never be able to clear your debts. There’s always hope, though. Debt consolidation in Scranton, PA, might be the solution you need.
Debt consolidation has become an essential topic in recent years. If you have too many debts and trouble paying them off, debt consolidation may be a good option.
It’s a financial process through which you can consolidate all of your debts into one debt. You will be able to pay for everything you owe in one go and wipe the slate clean. It’s definitely a relief.
This blog will look at how Debt Consolidation in Scranton, PA, works and how you can use it to pay off your debt and even save money in the long run.
What is Debt Consolidation in Scranton, PA, and How Does it Work?
Debt consolidation is a process of simplification at its most basic level.
It’s frighteningly easy to accumulate consumer debt in various ways, and even before you realize it, you’re tracking and making repayments on 10 or 12 separate accounts, if not more.
That, in itself, is frustrating, and it becomes even more so when exorbitant interest rates are involved. The median interest rate on credit card debt in the USA, as per US News and World Report, ranges from 16.39% to 23.45%.
Many personal accounts have substantially higher interest rates, making it nearly hard to pay off obligations. All of this is made more accessible by debt consolidation.
When you opt for debt consolidation, you seek out a “new” loan that combines all of the obligations you previously had and were attempting to pay off.
The Debt Consolidation Avenues to Choose in Scranton, PA
The Scranton, PA government has introduced various avenues to help people with debt consolidation. Only a select few could help you refinance your loans among the numerous strategies. Besides, it is crucial to keep yourself informed about the debt consolidation in Scranton, PA strategies.
The consolidation strategies mentioned below will assist you in predicting the financial outcome and drafting a plan from it. You can pay off all your commercial owes sourced from your credit card.
Credit Counseling and Debt Management Plans (DMPs)
Both credit counseling and DMPs go hand-in-hand in Scranton, PA. After realizing your credit card debt influx, you must consult a counselor about your expenditure issues. In some cases, they would refer you to a DMP agency too.
A credit counselor would help you enhance your self-control, while a DMP will assist with re-organizing and re-assessing your finances.
These strategies can be clubbed together to draft a plan that accommodates your lifestyle. Credit counseling will help you control your desire to use the credit card, and DMPs would help with budgeting. Both of them work exceptionally well if you have a good income source.
Such an agency will negotiate with your creditors to club all your debts together to make the recurring payment affordable and straightforward. Besides, it will guide and support you through your debt management plans and future consumer credit.
Debt Consolidation Personal Loans
In Scranton, PA, you can pay off the existing debt by fishing for personal loans. You can consolidate your debt through this refinancing technique and become debt-free instantaneously. You no longer need to worry about the existing debt’s monthly payment with unsecured personal loans.
Such a loan will help you retain your existing bank balance. However, you can incur a higher interest rate from these personal loans since they are unsecured.
At the same time, you need to be able to pay those off, or else you will require another consolidation strategy. Indeed, the collective amount will help you bring back the credit card balance, but at the cost of a more significant debt.
If you are confident enough to pay off the new loan, you can opt for this instant consolidation avenue.
Home Equity Line of Credit Loans (HELOCs)
Most of Pennsylvania would ask you not to opt for this debt consolidation method. However, you can gain a lower interest rate with good terms and lower/longer repayment schemes with HELOCs. You can utilize the home equity loan to refinance and consolidate your commercial debt if you own a home.
This second mortgage will get based on your home’s equity, but it works like a diverse credit card. You can access it whenever you need a lump sum with an interest rate.
Besides, in HELOCs, you only have to repay the amount you fish out and the interest. In some cases, you can even utilize the cash-out refinancing strategy in Scranton, PA. The only downside is that the risks of losing your home are higher if you cannot pay back the lender.
What are the Best Debts to Consolidate?
You can theoretically consolidate any form of debt. Due to their rising monthly payments and interest rates, some types of debt, such as unsecured loans, are ideally equipped for Debt Consolidation in Scranton, PA. Here are some of the best debts to consolidate:
Medical Expenses
According to CNBC, “almost 1/3 of working Americans presently have some type of medical debt,” with roughly 28% owing $10,000 or more in 2020. Medical expenses are often a form of debt worth combining because of this.
Credit Cards
In 2020, Americans owed beyond a trillion dollars on credit cards. “The median credit card balance is now approximately $6,200, and the average American owns four credit cards,” as per Experian.
Credit cards frequently charge up to 20% interest rates, making their debt one of the most incredible types of debt to consolidate.
Payday Loans
These cash advance loans are a boon for people short on cash requiring a little help until their subsequent paycheck arrives. Payday loans are typically offered in small sums paid back with a hefty fee.
As a result, tiny, short-term loans may have an Annual Percentage Rate of 20 times that of a bank card. If you have pending payday loans that renew every fourteen days, combining them at a lower interest rate could improve your financial condition and well-being.
Key Takeaway
Despite being a wise financial decision, debt consolidation isn’t always the easiest option to pursue. It’s essential to take your time and weigh all the merits and demerits before making your decision.
If you consider debt consolidation, remember that it is not free money. You will still have to pay off the loan, so you will still have to stick to a budget and cut your spending.
In either case, Debt Consolidation in Scranton, PA, is the most effective strategy to get out of debt. Brace yourself to live debt-free for the rest of your life!