Secured Debt Consolidation

Best ways to get out of loans - Secured debt consolidation methods.

Pay the entire balance due or at least more than the minimum due. Don't prolong the pain try to settle dues as soon as you can. As a first step, pay more than the minimum due amount on your credit cards. If your loan has no prepayment penalty, pay more than the monthly installment. Banks and creditors want you to pay slowly. That's how they make those big profits. The longer you take to pay, the more they earn in interest from you. Don't fall into their trap. Make a few sacrifices put off buying that watch by a month, cut your bills on eating out to half.

Use a credit card that has the lowest interest rate If you have to use credit cards, use the one with the lowest interest rate to the allowable credit limit. If the card allows you to transfer your balances from other high interest cards do it immediately. This is the least painful way to cut your debt without changing your lifestyle. You should also look for a credit card that allows you the longest settlement time.

Use your savings to Pay your debts Consider this. Most of us have money in the bank savings account earning 4 per cent or so and are paying back a car loan at 18 or 19 per cent. Of course you need some cash for emergencies. But calculate how much you really need and start paying back more than the minimum required or the installment amount. And don't forget that you pay tax on the interest/dividends you earn. So if you earn 12 per cent on your bank fixed deposit but fall in any tax bracket, you end up getting only 9 10 per cent after taxes. Isn't it smarter to pay off your debt? Pay off the debt, and it's the same as getting that 18 or 19 per cent return without any risk on your part.

Borrow against your life insurance, bank fixed deposits and PPF account Banks will tend you money at nominal interest rates if you have a fixed deposit with them. You can also borrow at nominal rates against your insurance policies or from your PPF account. By tapping into these investments, you kill two bids with one stone. You leave your investments intact and at the same time begin to reduce your debt burden.

Take an interest free loan from family and friends It's a tough one, but no one will understand your situation better than those who love and trust you. So go ahead, get an interest free loan from them. But if you want to retain their affection, make a payment schedule and pay them back promptly. Otherwise you will sink two ships your personal credibility and their love.

Borrow from your provident fund Provident funds let you borrow a percentage of what you have in your account and that too at lower interest rates than the market. I do suggest though that you borrow from your provident fund sparingly since it is retirement money.