Debt Consolidation

Providing The Debt Consolidation Texas Locals Rely On!

Often, poor financial decisions put people in situations where they have to make difficult yet helpful choices. One of these is debt consolidation. At Debt Relief Experts of Texas, we provide debt consolidation services for people who want to get out of debt. 

Debt consolidation refers to the process of taking a new loan to pay off debt. Your multiple debts culminate to form a larger, single loan that has favorable repayment terms and a lower interest rate. In doing so, we help you deal with your credit card debt, student loans, or other kinds of debt. 

Since we have been doing it for years and have helped hundreds of people go debt-free, you can count on us to make your financial life easier too. Call us today to learn about our debt consolidation Texas services.

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+1 281-941-6809

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How Does Debt Consolidation Work?

The Debt Consolidation Loans Texas Needs

If you have gathered a lot of debt over the years, there are certain ways to pay them off, and one of them is debt consolidation. If you have different kinds of debt, you can get a loan to consolidate all of them into one liability and pay it off. 

You can apply for debt consolidation Texas through your credit card company, credit union, or bank. In instances that a bank or credit union turns you down, you can head to a mortgage company or private lender.

That is where we help you out. We make sure to find the best institution to consolidate your debt so that you do not have to deal with the hassle yourself.

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When Is it Smart to Consolidate Debt?

We suggest debt consolidation Texas to our clients in the following situations:

  • The monthly debt payment of the client is not more than 50% of their monthly gross income
  • The client has a good enough credit score to qualify for a low-interest loan or 0% credit card
  • The client has a consistent cash flow that covers the repayment of the debt
  • The client is able to pay off the loan in five years

At the end of the day, taking a new loan is a risky step, and you do not want to end in any more debt than you are currently in. That is why we help you make the right step in the right direction. 

It is very important that you have a consistent cash flow. If you earn enough money to pay off your monthly debt, that is only when you should take out a new loan. Moreover, there is no need to consolidate your debt if you have a small amount of debt. 

Instead, if you have a large amount of debt, we will help you enter into a debt consolidation strategy that will make you financially stable in the long run.

Types of Debt Consolidation

There are several ways to consolidate your debt. When you come to us for debt consolidation Texas, we help you weigh all your options so that you can choose the best way forward. 

Here are some solutions for Texas debt consolidation, based on your timeframe and budget.

Debt Management Plan

Having a debt management plan in place allows you to lower your interest rate and lower your monthly payment so that the debt goes away in three to five years. Nonprofit credit counseling agencies offer these plans as credit card companies give them discounts on interest rates, making it easier for consumers to make monthly payments.

Debt Settlement

In some cases, debt settlement is the only solution available. We negotiate with your credit card company so that you have to pay less than what you owe them. Sometimes, what you end up paying can be 50% less than when you actually owe to the credit card company.

With this, you will no longer have to be disturbed by harassing debt collectors.

Personal Loan

Personal loans are another way to consolidate your debt. You can take a personal loan from a credit union, a family member, or a bank. In most cases, personal loans do not require collateral and are unsecured.

As a result, they come with a higher interest rate. If a friend or family member offers to give you a personal loan, that could be more beneficial since you can negotiate on better terms. However, this is not always advised, as you may end up straining your relationship.

Benefits of Debt Consolidation Texas

Debt consolidation definitely has its shortcomings, but it can be very helpful if you want to get rid of your debt in the long run. Here are some benefits of debt consolidation loans Texas:

Streamlines Finances

When you combine multiple loans into a single big loan, you reduce the number of repayments you are making every month. In this way, you will have to pay a lower overall interest as the interest from all your different debts does not accumulate at the end of the month.

Moreover, if you only have a single loan rather than five different ones, there will be a lower risk of you making a late payment. That will eventually improve your credit score.

Most importantly, consolidating your debt will allow you to see how soon you will be debt-free since you only have to focus on one debt rather than several of them.

Improves Credit Score

When you apply for new credit in getting a loan, it will create a dip in your credit score. However, it will be better for you in the long run. Debt consolidation improves your credit score in certain ways.

For one, when you pay off your revolving line of credit, it will lower the credit utilization rate on your credit report. Your credit utilization rate is supposed to be under 30% ideally. When you consolidate your debt, this is made possible.

Similarly, when you make on-time payments on the new loan you have taken and eventually repay the whole amount, your credit score will rise.

Lower Interest Rate

When you were getting all these loans, your credit score might have been lower. It is possible that your score might have gotten better since then. If that is the case, you will be able to lower your interest rate through debt consolidation.

In doing so, you can save a lot of money that you would otherwise have to pay in the long run if you were paying a high interest rate.

Reduces Monthly Payment

Consolidating your debt also lowers monthly payments because instead of paying interest on five different loans, you just have to pay interest on one. Also, you will be getting a new loan with a longer term, so the interest rate will be lower.

As a result, you will have to pay a lower amount every month.

Cons of Debt Consolidation

At a certain point, debt consolidation might feel like a good option, but you have to be careful. Here are some shortcomings of debt consolidation:

Added Costs

When you take out a new loan, you have to pay an origination fee, closing costs, an annual fee, and balance transfer fees. Therefore, when you are getting a new loan, you should check the fees beforehand to make sure you do not end up paying a ton of fees.

Can Increase Raise Interest Rate

In some cases, debt consolidation could also increase your interest rate since your credit score might not be high enough to get a low rate.

Missing Payments

If you miss your payments, it will reflect badly on your credit score. Therefore, when you opt for debt consolidation, you have to make sure you keep your budget in mind.

May Increase Spending

Once you have consolidated your debt into one, you might be under the illusion that you have more money than you actually do. This could lead to increased spending, which will push you back into the black hole that is debt. You certainly do not want that, do you?

Therefore, it is important to stick to your budget and make sure you follow the plan rather than deviating from it.

Is Debt Consolidation a Good Option?

Debt consolidation is a good option in some cases, but you should not always treat it as your only option. At Debt Relief Experts of Texas, we make sure we guide you in the right direction so that you do not end up regretting your decision later. 

Here are some questions we ask to make sure debt consolidation is the right option for you:

  • Are you sure you can make a budget and stick to it every month?
  • Do you fully understand that you will have to make consistent on-time payments every month to make debt consolidation work?
  • Do you have the discipline and approach to make sure you can differentiate between ‘want’ and ‘need’?

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If you cannot answer these questions with a yes, you should be opting for debt consolidation. However, if you have a good credit score, you qualify for a debt consolidation loan. 

Get in touch with us today to learn about debt consolidation Texas and how it can help lessen your financial burden.

(281) 941-6809