Debt consolidation can occur with a margin loan obtain from your brokerage firm. Consumers who hold securities, such as stocks and bonds, in a margin account can acquire the necessary funds to pay off multiple high-interest debts.
Debt consolidation allows consumers to convert numerous balances into one easy account with low monthly payments. This process yields lower interest rates, and consumers gain the convenience of only dealing with only one creditor.
A margin loan from a brokerage firm or investment bank entails borrowing money against the cash value of an asset. Many consumers don’t realize the benefits of using a margin loan for debt consolidation. Margin loans can save large sums of money in interest charges when compared to other secured loans, such as home equity loans or secured credit cards.
A consumer with stocks, bonds or mutual funds deposited in a margin account at a brokerage firm can borrow against the value under certain limitations. Consumers who elect this debt-relief method obtain the financial support to eliminate credit cards with debt consolidation. By eliminating multiple credit debts, the consumer enters into one low-interest debt with the brokerage firm.
Debt consolidation with a margin loan at a brokerage firm is a fast and affordable method of regaining financial stability. The total amount of available funds through a margin loan depends on the market value of the stock. Brokerage firms lend a certain portion of the market value, usually around 65 to 70 percent.
However, debt consolidation with a margin loan involves some risk of inheriting more debt. If the market value of the stock declines, the brokerage firm may require the borrower to pay back the difference, which can include the entire margin loan depending on the amount of depreciation.
Debt consolidation using a margin loan from a brokerage firm can benefit consumers with low interest rates and more flexibility.