Consolidate your Debt with the Help of Alternative Lending

Many Americans are dealing with substantial debt. Debt consolidation is one of the tools those people have at their disposal to make debt manageable in the short-term and over the long-term. Often, some form of borrowing is required in order to make consolidation possible. The person in debt borrows, pays off multiple debts and then has a single payment to make each month. Unfortunately, personal loans aren’t available to many who are in debt, so alternative lending often fills that need.

What Is Alternative Lending?

Traditional lending encompasses credit cards and personal loans from banks. People in debt often lack credit cards or have maxed out credit lines. They’re also not likely to get a bank loan. Alternative lending is a replacement for those traditional options. Perhaps the most prominent example is a car title loan. If you have a car paid off and possess the title, you can borrow money in a secured and expedited manner.

What Are the Benefits of Alternative Lending?

As mentioned, one of the great benefits is that alternative lending is available to almost everyone rather than just those who have credit in good standing. Another advantage is that these loans can be for small amounts over short terms and processed often in as little as 15 minutes. In fact, you can even get these secured loans processed online and have money deposited into your account. Once your first secured loan has been finalized, claiming additional money is as simple as a button press. The first time, you’ll need to complete a brief form, which may include simple details, such as your:

  • Full name
  • Zip code
  • Contact information
  • Collateral details
  • Routing number

Consolidating Debt

The essence of debt consolidation is that you combine all or most debts into a single pool or a small number of pools that are much more manageable. Debts can include:

  • Car loans
  • Mortgages
  • Credit cards
  • Credit products

One purpose of this is to limit the amount you owe each month to a realistic number. It also focuses repayment of debts to a single due date so that you can plan around it specifically. Consolidation can also help to avoid interest charges and fees that would otherwise increase your overall debt. Having your debt all in one place has emotional benefits as well. Often, the biggest challenge in overcoming debt is remaining targeted on your goals and not becoming overwhelmed.

In a nutshell, the benefits of debt consolidation are:

  • A positive outlook
  • A single due date
  • One payment a month
  • A lower monthly payment
  • Avoidance of interest and fees

Breaking Unbreakable Debt Cycles

Often, when people find themselves in unmanageable debt, they get into an unbreakable cycle. They pay the minimum, continue to owe and often have to borrow from expensive sources to get by. This approach may seem like the only option but it isn’t sustainable. Alternative lending is a way to break this cycle even when you aren’t eligible for bank loans and the like. Sometimes, a title loan or similar gives you that financial breathing room to make deadlines and avoid the additional costs that can cripple you.

Using Alternative Lending to Avoid Interest and Fees

Continuing to pay interest and other fees is among the most difficult aspects of being in serious debt. The upside is that you can use the alternative lending options out there to make payments on time and to make larger payments now than would otherwise be possible. Think of it as a tool. Used in structured manner, you can use it to avoid unnecessary costs and climb out of debt.

Targeting the Smallest Debt at a Time

If total debt consolidation isn’t feasible this moment, then many debt advisors recommend targeting debt from the bottom up. In other words, you get rid of the smallest debts first. It may seem a bit counterintuitive. It can mean a large total cost overall, but if you do it in a structured manner, the difference isn’t substantial, and it can make getting out of debt more practical. The interesting thing about alternative lending is that it’s perfect for this approach as well. Use it to get rid of as many debts as your can in a single month. Once only big debts remain, use it to chip away at the balance.

Final Thoughts

If you’re in debt and struggling to overcome it, then debt consolidation and consolidation through alternative lending in particular may be the solution you’ve been seeking. Even something as simple as a title loan can set you on the path to financial freedom.

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