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How to Pay Off Multiple Installments Loans: What Options Do I Have?

If you are juggling multiple forms of debt, it is fair to wonder, “How do I get out from under these installment loans?” The mounting debt can be a burden that limits your short and long term financial flexibility. Fortunately, there are ways to conquer your installment loans.

Best Strategies For Paying Off Multiple Installments Loans

The best debt strategy is different for every person. Mathematically, it makes the most sense to pay the installment loan with the highest interest rate first. However, if you want to avoid a snowball effect, you may opt to pay those with the lowest balance. Others may even choose to treat all their loans equally when it comes to repayment.

Instead of dealing with your installment loans separately, you can bring them into one payment with a debt consolidation loan. This option is best for people who can get a zero percent credit card and who have mortgage debt under 40 percent of income. There should also be a consistent stream of income to pay off the loans.

Choosing Debt Consolidation

Debt consolidation loans come in two flavors. The first one is a fixed-rate option. The borrower will receive a loan that they use to pay off the debt and then pay back the loan installments to the lender at a lower interest rate. There is also the 0 percent balance-transfer credit card option, which transfers the debt to the card and lets people pay back debts during the promotional period.

Debt consolidation isn’t for everyone, especially those with overwhelming debt. If you are in this situation, you should consider bankruptcy, debt settlement, or debt management. Regardless of what you choose, you should take proactive steps to improve your credit score with timely and full payments on existing loans.

Writer

Vivaan Marsh is a professional writer, editor and an expert in personal finance. Her career as a professional writer stretch for over 11 years. One of her passions in life is to help everyday families with there financial problems, making their life a bit easier and explaining complicated topics in an easy way. Read more >

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