Debt consolidation loans can be the answer to a number of
financial problems, but before you take the plunge, make sure you're
well informed.
What is a debt consolidation loan?
Debt
consolidation is when you arrange a single loan to cover a number of
existing debts. Rather than juggling several expensive payments, such
as credit card or hire purchase bills, a debt consolidation loan means
a single manageable monthly payment. You'll also benefit form lower
monthly interest payments; compare an average secured debt
consolidation loan of 12.4% APR to a credit card company charging 19.9%
APR.
Besides lower interest rates/ payments; you also benefit
from knowing that a consolidation loan runs for a fixed term, and that
every repayment you make goes towards clearing the loan. Without
consolidation you may find that minimum monthly payments simply service
the interest accrued on your debt, without having any impact on the
debt itself.
Debt consolidation also offers an opportunity to
repair your credit rating. Remember that any missed payments and bank
charges count against you in the eyes of lenders. It's a vicious
circle: a poor credit rating means that lenders see you as a risk,
which in turn means they charge you higher interest rates. By repaying
all your creditors and taking out a single loan; you are already well
on your way to rewriting your credit history.
Getting the best debt consolidation loan
When
looking for a loan, the first step is to work out exactly how much you
need to borrow. Calculate how much you owe on credit cards, standing
orders, overdrafts etc. and only borrow as much as you owe. Because
most debt consolidation loans are 'secured' against the value of your
property; you won't have trouble finding lenders willing to arrange
loans for considerably more than you actually need. However, getting
further into debt rarely makes financial sense.
The next step is
to begin shopping around for the best deal. Visit a number of FISA
registered brokers and see what they can offer you. Recent industry
regulation means that loan providers must now tell customers the total
cost of repaying the loan, rather than monthly payments and the loan's
lifespan. Make sure that you compare like with like; don't be tempted
just by low monthly repayments as you may find that the loan has a
substantially longer term.
Are there any drawbacks?
Debt consolidation loans often make shrewd financial sense, but it's important to know exactly what you are getting into:
Firstly,
you may be cutting your monthly outgoings, but it's important to
understand that you are refinancing your debt over a much greater
period of time. In the long run you may actually be paying more.
Secondly,
most debt consolidation loans are also secured, which means that your
property is at risk if you continually default on repayments.
Finally,
it's worth bearing in mind that you are under no obligation to repay
your outstanding debts. Use the loan wisely to repay existing debts;
and you can look forward to a bright financial future. Use it simply to
raise capital and keep spending and you will soon be in trouble.
MORE RESOURCES: RELATED ARTICLESDebt Consolidation: Why And How This Strategy Often Backfires!
Debt consolidation solutions, has found that as good as it sounds, debt
consolidation loans rarely save you any money.In fact, they usually
backfire and you wind up with an even greater debt load than before.
Debt Consolidation Company and Companies Debt
consolidation companies have dotted the debt solution landscape as a
result of the critical financial conditions consumers find themselves
in from heavy credit card debt and other unsecured loans. With
approximately 80% of Americans in debt up to $10,000, some are
exploring a debt consolidation company in order to reduce or eliminate
the crushing debt load that they carry.
Credit Counseling - Get in Line Now to Avoid the Upcoming Rush Credit
counseling is a valuable service for consumers who have trouble
managing their finances. A distinctly different service from debt
consolidation, credit counseling assists consumers with problem debt by
educating them about the basics of money management.
Debt Consolidation Primer - Four Things You Can Do to Get Out of Debt
Problem debt is rampant throughout America. In addition to mortgages and auto loans, the average household in the U.
Planning To Become Debt Free With A Consolidation Loan If
you have multiple debts, and are struggling to meet the monthly
payments, then there's a good chance you will want to consider, now or
later, a consolidation loan to become debt free.If you have already
studied your monthly expenditure and can see no way to make savings,
and find you have no way of earning extra money, then your next option
may be a free debt consolidation loan.
How Do I Know a Good Credit Card Debt Reduction Strategy When I See It? Credit
card debt reduction is an important part of the debt reduction process.
The way credit card debt reduction works is if you have five credit
cards, you need to keep track of and pay 5 bills every month.
Debt and New Spirituality Overcoming
the stigma of being in dept, grow in self-confidence and regaining ones
own centre and balance again, is easy in the new energies. This is all
about being true to yourself, what we have been doing in the past is
buying into other peoples beliefs and concepts.
Debt Elimination 4 Planning
For Debt Elimination Without Surplus CashPreviously we looked at using
surplus cash each month to chip away at those outstanding loans, on our
long road to debt elimination. But what can you do if there is no
surplus cash every month?So, you have examined your monthly outgoings,
and there is nothing to cut out in the way of expenditure.
Cheap Debt Consolidation Loans - Inexpensive Way of Winning Financial Freedom The
rising cost of living can force you sometimes to overburden your pocket
with loans. It may solve financial issues for the time being but
eventually then they are to be paid back.
Consolidate Debt to Help Get You Out of the Quagmire Will
you agree with me if I tell you that, the key to financial success is
to live within your means? This is an old belief that modern day income
earners have completely forgotten. This is because it is now extremely
easy to get into financial trouble.
Credit Card Blues For
the average American family, debt, and especially credit card debt is
spiraling out of control at a record pace. The average household credit
card debt has risen dramatically from $3000 in 1990 to over $8000
today.
10 Pointers on College Loan Consolidation
Should I consolidate my college loans or not?1. Still in school, yes! Rates are low, but they're scheduled to go up.
Debt Consolidation can Ruin Your Credit Yes,
Debt Cosolidation isn't a good idea and I'll tell you why. I've done
research of my own and found out some disturbing information.
Debt Consolidation Confusion Learning
about debt consolidation can be quite a confusing venture for your
average person. There is plenty of conflicting information to be found
about debt consolidation.
Tracking Down Cheap Debt Consolidation Loans In
the modern world of expensive living and high interest rates, it might
seem nearly impossible to find cheap debt consolidation loans. If
you're one of the people who desperately need one of these loans then
there's a good chance that you have less-than-wonderful credit? meaning
that you've probably already accepted the seemingly-inevitable fate of
paying high interest rates for any loan that you get.
Escape the Credit Card Death Spiral
You're burdened with crushing debt and at the end of your rope. There's got to be a way out.
Debt Management - How a Debt Consolidator Can Reduce Your Debt A
Debt consolidation program starts with evaluating your financial
situation. This process involves an in depth analysis of your financial
standing.
Open the Cash Vault Inside Your Home
Believe it or not, many people do not understand equity and the power it provides.In its purest form, equity is money.
Consolidate All Your Debt Into One Monthly Payment Are
you feeling overburdened with debt? Are you paying out too much every
month for your credit cards, store cards and loans? Then why not
replace them all with one, lower, convenient repayment through a
consolidation loan?Consolidation loans can give you a fresh start,
allowing you to consolidate all of your loans into one - giving you one
easy to manage payment, and in most cases, at a lower rate of
interest.Secured on your UK home, low cost, low rate, cheap, low
interest debt consolidation loans can sweep away the pile of repayments
to your credit and store cards, HP, loans and replace them with one,
low cost, monthly payment - one calculated to be well within your
means.
Debt Consolidation Solution
Debt Consolidation is a solution that solves your debts. Debt is a financial hazard.
