Is Harrison Funding A Good Option For Debt Consolidation vs Refinancing?
Who is Harrison Funding and can they be trusted? If you have been thinking about it and you just received a “too good to be true” loan offer in the mail from Harrison Funding, Credit 9, Americor Funding, Johnson Funding, Taft Financial, Georgetown Funding, Memphis Associates, Silvertail Associates, Safe Path Advisors, Coral Funding, Tate Advisors, Patriot Funding, Malloy Lending, Plymouth Associates, Apply Credit9, Americor Funding, or Titan Consulting Group – listen to your gut instinct.
If you are looking to take out a personal loan, you will need to compare the different options available. When looking at debt consolidation vs refinancing it’s important to assess the advantages and drawbacks of each option before committing to one.
Simply put, debt consolidation enables debtors to repay many different debts using a single payment. Refinancing on the other hand helps debtors who have already taken out a loan. Let’s look at each option to determine which is right for you.
Debt Consolidation vs Refinancing
Debt consolidation is the practice of taking out a loan to pay-off a credit card debt with a high interest – without a credit card hardship plan. These loans can be secure or unsecured depending on where they are obtained from.
Common types of secure loans include a line of credit or a home equity loan. These require the debtor to put up some collateral to obtain. Unsecured loans are personal loans issued from online lenders or banks. Debtors do not have to put up any collateral to obtain an unsecured loan. However, they may come with less favorable terms compared to secured loans.
Debt refinancing is a less complicated method for managing your debt if you have good credit. To perform refinancing, you will need to obtain a credit card with a high credit limit as well as 0% interest on balance transfers. Using this option you can move your debt from your high-interest credit cards to a new one with better terms.
These 0% interest balance transfers are usually offered for a period of 12 to 18 months. When this grace period is over, you will be charged the standard interest rate for the card, which can be very high. If you wish to use this option safely, you will need to pay off your card balance before the grace period ends.
All these factors should be taken into account when comparing debt consolidation vs refinancing.
Who Can Benefit From Debt Consolidation?
Using consolidation to ease your debt burden may not be a suitable option for everyone. For example, debtors with a high equity on their homes, a reliable source of income, and a fairly good credit rating will experience little to no difficulty in finding a loan issuer.
However, other debtors who are in a worse financial position may be able to apply for only unsecured loans. These come with high-interest rates, but they may still be a viable option as the interest rate on unpaid credit card debt is usually higher.
Advantages Of Debt Consolidation Over Refinancing
The biggest advantage of choosing debt consolidation over refinancing is the lower interest rates and the longer repayment term length on consolidation loans. This can be important, as any unpaid credit card balance may be subject to interest charges up to 25% each month.
By contrast, taking out a home equity loan could be the better the option due to its much lower interest rate.
Debtors also have the option of taking out a personal loan. However, they may be charged a loan fee in addition to interest. The interest rates on these loans can also vary depending on your financial standing.
The aforementioned options are seen as advantageous due to their lower interest rates compared to the rate on credit cards. They also provide debtors with an idea of how much they will need to pay over the course of repayment. In addition to this, you will need to make only one payment per month, which is easier than paying multiple credit card bills with different due dates.
Drawbacks of Debt Consolidation vs Refinancing
Debtors should understand the potential drawbacks of debt consolidation before applying for it. If you take out a secured loan such as a home equity loan, you will need to put up your home as collateral. In the event you are unable to keep up with monthly payments, you may lose your home to foreclosure.
Given that credit cards are considered unsecured debt, it may be wiser to consolidate your existing credit card debt using an unsecured loan. If you choose this route, you should ask your loan issuer about any fees or charges on the loan, as well as annual rates and the loan term length.
When taking out these loans, you will be asked to provide details such as your debt, credit score, and income. The loan issuer may also verify these details themselves, so it’s important to have your finances in order before applying for debt consolidation over refinancing.
Who Can Benefit From Refinancing?
Refinancing is a less complex method for reducing your interest payments. This route can give you some extra time, but you will still need to pay off your debt as quickly as possible to avoid high interest charges.
In credit card refinancing, debtors move their debt balance from their existing cards to a new one with 0% interest for a specified grace period. This special period lasts between 12 and 18 months, which could temporarily relieve your debt burden.
Advantages of Debt Consolidation Compared to Refinancing
Debtors that move their debt to a new card with 0% interest can reap the benefits of refinancing if their credit limit is high enough to accommodate their full debt amount. Interest tends to compound over time, so moving your balances over to a 0% interest card can prevent you from spiraling further into debt.
Drawbacks of Debt Consolidation Over Refinancing
Some people will have difficulty qualifying for cards with 0% interest grace periods. You typically need a good credit score of 680 or higher when applying, or your card request may be rejected.
In addition to this, debtors will need to pay off their balance before the grace period ends, or they will be charged very high interest rates. The transfer fee can also be around 3 to 5% for these cards, which should be taken into account.
Debt Consolidation vs Refinancing: Which Option is Right For Me?
After understanding the pros and cons of each option, you will know which one is right for you. Refinancing is preferable for debtors with enough income to pay off their balance within the 12 to 18 month grace period.
Debt consolidation is a better option if you don’t have the finances to pay off your debt within the grace period. This consolidation loan makes it easier to repay your debts as soon as possible, and you can also benefit from the longer-term repayment on the new loan.