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Is There a Minimum Debt Consolidation Amount?

Debt Consolidation

Have you ever wondered if debt consolidation is right for you? Many people have debt on several different credit cards. In some cases, it becomes difficult to manage the number of payments every month, or to even afford the minimum payments. If this is your situation, you may want to consider taking out a debt consolidation loan. If you only have a small amount of debt, you may be wondering whether or not you have enough debt to take out a debt consolidation loan. Every company has different amounts that they will issue debt consolidation loans, but there are some principals that you might want to follow when you consider whether to take out a consolidation loan or not.

Every Company is Different

Some companies have minimum amounts that they offer debt consolidation loans for. Some companies offer consolidation loans for $2,000, while others offer consolidation loans to people who have $10,000 or more in credit card debt. Some companies don’t have any minimum amounts that they offer. However, even though some companies don’t have minimum amounts that will offer debt consolidation loans for, it may not make sense to take out consolidation loans for small amounts.

Debt Consolidation Can Come With Fees

Debt consolidation loans often come with fees. Some debt consolidation loans are set up as a home equity loan. With those types of loans, you may have to pay for an appraisal, and pay for other fees associated with setting up a home equity loan. Other loans will make you pay processing fees, or fees to establish the loan. The loan company may try to talk you into buying loan insurance. When you are consolidating a large amount of money, these fees may only amount to a small percentage of your loan, but if you are taking out a small consolidation loan, these fees can be large enough that consolidating your bills doesn’t make financial sense.

Small Amounts Can be Paid off Quickly

If you only have a small amount of credit card debt, you probably don’t need to take out a debt consolidation loan. Debt consolidation should be reserved for cases when you are having difficulty making payments on your loans or managing your bills. If you only owe a small amount, you can probably pay off your debts in some other way. If you are having trouble dealing with the number of credit card payments that you have to make every month, you may be able to transfer the balance of some of your credit cards to other credit cards. You may also want to try to find some way to increase your income on a temporary basis while you pay off some of your debts. Use your excess income to pay off your smallest debt. Holding a garage sale, working overtime, doing odd jobs for your neighbors, or taking on a second job delivering pizzas could provide you with enough extra income to pay off the smallest credit card. Paying off just one credit card might provide you with enough breathing room to help you pay off the additional cards.

Save Consolidation for Difficult Debt Repayment

Although you may be able to find a debt consolidation loan that does not have a minimum amount, in many cases, it doesn’t make sense to get a debt consolidation loan for a small amount. Small amounts of debt can usually be paid off with a little extra effort for a short period of time. When you have larger amounts of debt, taking out a consolidation loan makes sense, even with the fees that may come with the loan.

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