Debt Consolidation Loans: Paying It All With One!
The idea is simple, you get a single loan for a fair amount with which you repay all your outstanding debt and obtain all the benefits associated with this procedure. Not only the process is simple but also the requirements needed to get approved for a debt consolidation loan are definitely easy to achieve.
Benefits of Debt Consolidation Loans
Debt consolidation loans can easily reduce the number of payments you have to do each month. Since the money obtained from a debt consolidation loan is used for repaying all your outstanding debt, then, the only debt left is the consolidation loan which implies a single lower monthly payment each month instead of the multiple payments that you had before which combined were surely a lot more expensive.
The interest rate charged for the money you will owe on your consolidation loan will be significantly lower than the overall average rate charged for your credit card balance payments, cash advance payments, unsecured personal loan payments, etc. Thus, the resulting monthly installments will be significantly lower.
In the long run, a lower interest rate reduces the overall interests paid for your debt. Thus, by consolidating, you’ll be saving thousands of dollars over the whole life of the loan. If you destine these savings to repaying your debt, you can get debt-free sooner and with less hassles than if you decided to repay your debt as it was.
Requirements And Approval
The approval process for debt consolidation loans is fairly simple. You just need to fill some online forms as most lenders have online sites featuring their financial products. After you submit your application, it will be considered and in a matter of minutes, a response will be sent to you as to whether you’ve been pre-qualified.
Then, you’ll be required to submit some documentation backing up your application statements like copies of your pay checks, tax receipts, etc. With this documentation the final loan review will take place and you’ll be contacted as soon as the loan has been approved. The money will be then made available either in cash or by depositing it into your bank account.
However, if you work with a consolidation agency, they’ll retain the amount and proceed to cancel all your outstanding debt with it. This is due to the fact that consolidation agencies want to make sure that the money is used for the purpose it was intended to and not for incurring on other expenses.
As to the requirements, you need to have a fair credit and income. Some credit delinquencies can be overlooked but the income requirement is essential. You need to prove that you’ll be able to meet the monthly payments on your consolidation loan without sacrifices. Moreover, in most cases, to get a low interest rate on your consolidation loan you’ll need to have equity available on your home in order to secure the loan.
By: Kate Ross
July 25, 2010
Debt Consolidation: Do It Yourself
However, if your situation is not so complicated, you can carry out your own debt consolidation process without too many hassles.
If you don’t have too many creditors and different types of loans and credit cards, solving your debt problems doesn’t have to be so complicated. You can save the money a debt consolidation company will charge you and solve your financial difficulties by yourself.
Debt Negotiation
The main part of a debt consolidation program is debt negotiation. What you need to do is to contact the lenders and try to speak with someone who has the ability to decide over your debt. This can usually be done with personnel from administrative or legal departments. Customer Service won’t help you on this matter; just ask them to put you through to the proper department.
Once you’ve contacted the lender, you need to make things clear. You have to state that you are unable to repay your debt under the current terms and that you need to have your debt rescheduled under more advantageous terms in order for them to get their money back. Don’t mean it as a menace, you need to sound concerned, they need to understand that you want to pay but you can’t and that if they are flexible enough they’ll be able to recover their money without entering long and costly legal processes.
Unless the lender holds a real estate guarantee, chances are that they will tailor a new loan with favorable terms so you can retake your monthly payments without sacrifices. If you are convincing enough you can get all the debt created due to punitive fees and interests eliminated and a new loan reschedule to suit your needs.
Get a Loan for Consolidating
Another thing you can do, either instead or after debt negotiation is to obtain a loan for a considerable amount repayable over a long period of time so you can use the money to cancel outstanding debt and end up with a single monthly payment with a lower interest rate. By doing so you’ll get the same results as a debt consolidation company handling your payments. You’ll have a single monthly installment to worry about and you’ll also save thousands of dollars on interests over the whole life of the loan.
Doing this after debt negotiation is better, since you’ll already have reduced your debt substantially after debt negotiation. If you add to that reduction the money you save by exchanging your current debt with a single debt consolidation loan, you’ll really improve your financial situation and you’ll be able to recover from bad credit within a couple of months.
In order to get approved for such a loan you’ll need to hold some equity on your home. This kind of loan can only be obtained by applying for a secured loan. A home loan, a cash out refinance loan and a home equity loan are the options suggested by most debt advisors.
By: Mary Wise
July 11, 2010
Debt Consolidation – How to Eliminate Your Debts Via Debt Management Programs?
You can choose to get rid of your overbearing credits via debt consolidation or a settlement program. Both are effective debt management programs and can help you overcome your financial anxieties and worries. However, the process entailed by these two programs is quite different. You need to understand how a consolidation program differs from that of a settlement program before you opt for one. Debt relief industries are making money, these days. In this current recessionary phase, this seems to be the only industry that is gaining in fame and popularity.
Debt consolidation can help you get out of debt in a smooth manner. But you need to keep patience to do away with the entire debt. If you hire a consolidation company, they will negotiate with your creditors and manage to lower the rate of interest. You just need to pay the amount as monthly installments to the consolidation company. The paper work, legalities and all other hassles will be taken care of by the professionals that you have hired. On the other hand, a settlement program involves negotiation wherein the debtor arbitrates with the creditor and manages to eliminate a considerable portion of the amount that is due. At times, if the debtor is not very conversant with the negotiation tactics he can chose to have a professional company do it for him. Usually the percentage of reduction is something in between 40-50 percent. However, the percentage of reduction might vary depending on the strength of the case.
The downside of the settlement program is that it might have a bad impact on your credit score. In case of a consolidation program, you might not be able to eliminate any percentage of the amount that you owe but you will surely get to manage the overriding debts in a smooth and easy manner. Debt management programs are in vogue, these days. Millions of Americans are taking resort to these programs to overcome their debt related problems. Before you opt for professional help online, make sure that the service you are opting for is a legitimate one. A good number of fraudulent companies are doing the rounds, these days. Do not fall prey to their deceptive and alluring offers. Seek help from those companies that have a favorable reputation in the market.
By: Katherine S. Young
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