What is your opinion on a debt consolidation loan??
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If you are looking to consolidate debt, first you should think about how you got into debt. If you haven't changed your spending such that you can avoid more debt, it doesn't make any difference if you consolidate your existing debt only to use the cards some more and go further into debt.
If you had a one-time occurrence or are already paying down debt, a consolidation loan at a lower, fixed rate may be beneficial. It will give you a fixed time period for when you will be out of debt and your rate won't change over the life of the loan.
You might consider person-to-person borrowing from the following website. People who are consolidating debt can often get better rates than banks for a 3-year fixed rate loan. If your credit is decent, lenders can bid on your loan request in an auction format and that will help you get a great rate. Check it out.
If it's an unsecured loan (nothing is used for collateral like a house or a car) then there are two different types:
Revolving-like a credit card-you get a 10,000 credit line and your payments will vary depending on the outstanding balance. Higher balance=higher payment and vice versa. Benefit is that as you pay the balance down, you can re-use the available credit. Disadvantage is that there is no set number of years until the account is paid off. These are almost always adjustable rates.
Installment-like a car loan-you take out the $10,000 on set terms regarding interest rate, payment and term (#of years you have to pay it off). You make the same monthly payment every month until the loan is paid in full. Benefit: Some are available as fixed rate. You'll know exactly how much longer you have to keep paying on the loan. Disadvantage: you can't re-access the money.
What you will do is take the money from the new account and use it to pay off the other small credit cards and only have one new payment on the new $10,000 loan.
Things to consider: the new loan should have a lower rate than the existing ones in order for it to be beneficial. If this is the case, your new monthly payment should be less than the total amount of payments you are making on your multiple accounts.
Only pay off those credit cards that are a higher rate than your new loan and then attack the accounts with the highest interest rate first.
Practically any type of loan can be wrapped into the debt consolidation process. Common types include finance charges, late fees and overdraft charges, credit cards, personal loans, utility bills, medical bills, car loans, store cards, gas cards and back taxes. A debt consolidation loan<!--allows you to condense your monthly payments into a single, simple bill, while lowering your interest rates and helping you pay down your debts more quickly and easily. It is also an essential tool in avoiding the much more serious step of declaring bankruptcy.
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Unlike bankruptcy, in which debts are cancelled and your credit rating collapses completely, debt consolidation loans are essentially a type of refinancing, where several-->old loans are replaced with a new one that has more favorable terms. Your loan consultant will negotiate with creditors on your behalf, so you’ll no longer have to deal with harassing phone calls and daily mail.
I currently have a debt consolidation loan from my credit union. Basically they put the cash in your bank account and you use it to pay off the credit cards.
Some banks might require you to cut up the cards that you are paying off, some won't. They then put you on a fixed interest rate and you pay off the loan in 3 years. You can pay it off sooner if you like.
Some banks don't want to give you a consolidation loan for less than $10,000. If that happens you might try a credit counseling service.
Credit counseling services contact the credit card companies and negotiate a fixed interest rate in return for you cutting up the card and making fixed payments over 3 years.
Downside is the credit card accounts are closed. Upside is high interest, late charge, over balance charges, etc. are stopped and you make one fixed payment every month to the counseling company who then distributes it out to the various card companies.
I've done both of these in my life and they both achieved the same goal. Paying off my debts in a reasonable amount of time and stopping the high interest debt that you can never seem to catch up on or pay off.
If you want information on credit counselors you can visit my site here and read more about them or register with one (in case the bank won't give you the loan).
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Good luck! I've been there myself and know what it's like to deal with these high interest rates and late fees that never seem to stop!
Though debt consolidation loans charge lower rates of interest than most other types of loans, there is a big difference in rates charged by various lenders. Hence research the lenders thoroughly before applying. Tell the lender how much you can pay and till when you can pay. They can find out a right plan for you.
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There is a great place to go with this. I was in a very similar situation.
This is getting help from real people without the use of banks or credit card companies. Good Luck!
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Anybody can have a bad credit record. Mistakes do happen. But what we should do is not to repeat the mistakes.
Follow the same advice when it comes to loans. If you have a bad credit history, then go for a bad credit loan. It is a feasible loan option to let you fulfill your financial goals. A bad credit history can include arrears, defaults, bankruptcies, County Court Judgments etc.
Usually, adverse credit loans are given as secured bad credit loan options. The lenders prefer the secured loan option to ...
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