Consumers wanting to consolidate their debts will find many corporations in the same category as Symple Lending, but which should you choose? Determine which debt consolidation approach works best for your situation. According to Oklahoma Debt Relief, an educational website, three options abound:
- Consolidation loans
- Debt consolidation through a corporation
- Debt consolidation through a non-profit.
Here’s how each differs.
Consolidation Loans
People with more than $7,000 in debt but who still have a high credit score can qualify for a loan to consolidate their debts. This option works well for those who need a single payment and interest rate, according to Bankrate. To qualify for prime rates, you’ll typically need a credit score of 670 or higher. If you manage money well and can avoid the temptation to use the loan for other purchases, a consolidation loan can provide a quick method of eradicating many debts and having only one left. The financial lender provides you with the loan directly and leaves it up to you to pay each bill.
Debt Consolidation Through a Corporation
When you consolidate debt using a company like Symple Lending, the firm provides you with a script to use when you phone your creditors. They don’t do it for you. You must register for the corporation’s program, and, in most cases, this requires at least $7,000 of debt. Apprising each creditor of your enrollment in the company’s debt consolidation plan lets them know of your intent to pay your debt. Some debt consolidation companies have standing agreements with major creditors to provide a discounted debt to each participant. Once you negotiate your new debt amounts, you report them to the consolidation company, paying them a blanket sum each month, which they disburse for you to each creditor. Consumers with any credit score can use this method.
Debt Consolidation Through a Non-Profit
Consider using a non-profit to consolidate your debt if you can’t qualify for a loan or lack the negotiation skills to contact the creditors yourself. Using a non-profit requires registering all of your debts with the organization and closing every credit card. During participation, you won’t be able to open new credit lines or use your existing ones. The non-profit contacts each creditor for you and negotiates a lowered debt and interest rate. They provide you with a single payment to make each month, which they distribute to each creditor for you all on the same date. Because the debtor gives up control of the debts and names the non-profit as their financial manager, credit card companies tend to provide the biggest discounts to people who use this method.
Which Option Works for You?
Only you know yourself well enough to decide which option would work best for you. Only a loan requires a specific credit score. While it offers the quickest way to pay off many debts, you will still have one large one. Consolidating debts through a company or non-profit usually gets you a nicely reduced debt owed and a single payment per month. Be honest with yourself about your financial management skills and choose wisely.
