Debt consolidation refers to the process, where in the borrower takes a single loan in order to pay for multiple loans. This is done in order to get a lesser or fixed rate of interest that is more convenient for the borrower to pay. Debt consolidation loans have gained popularity in the recent years as more and more people are succumbing to the credit card trap and borrowing debt above their affordable means. In such a situation, the borrowers can take the help of reliable debt consolidation companies to eliminate their debts in a shorter time span. The financial institutions offering debt consolidation loans help the customers with their burdened debt by providing debt consolidation, debt management, and debt settlement. Any borrower who is in a credit crunch can apply for a debt consolidation loan.
By consolidating more than one loan into a single monthly payment, the sum of payments on individual debts is reduced, thus easing off the pressure of debt of a person in financial trouble. For example – if you have three loans with large interest rates, you can choose to go for a single debt consolidation loan to decrease the interest rates of the three loans. By opting for a debt consolidation loan from a reliable institution, your interest rates can be reduced to a considerable extent and the late fees can be completely eliminated. Most of the financial institutions have a team of financial experts who evaluate the financial situation of each client, study his resources, and provide an excellent debt relief plan to the customer based on his specific needs and requirements. Debt consolidation loans usually involve collaterals in the form of a house or a property. You can apply for a debt consolidation loan if you are not happy with your current terms of payment in order to secure a lower interest rate, to secure a fixed rate of interest, or for any other similar reasons. You can also get customized debt consolidation relief plans from some companies according to your own specific needs.
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Hi,
First, the only things that effect your credit with regard to your CC's is current balance vs. Limit and payment history– they have no idea if you are under a 'penalty APR'.
That said, a loan is not always the way to go– First, its important to have 'revolving debt' and not just installment debt. Second, HISTORY is important, so you dont always want to close accounts if you've had them for more than a year or two– longevity is important.
Have you called your companies and tried to negotiate? MOst of them work with you! All you have to do is say that you're trying hard to get your CC's under control and you can make X amount each month, what can they do to help you? I've had late fees reversed, APR's cut in half, etc, etc. And if you dont have luck, try again in a day or two– I noticed some customer service reps try hard to help you and some have "tough luck" mentalities, even tho they both work for hte same company.
Try your best to arrange this first before doing the loan thing. ANd if you DO do the loan thing, consider paying the cards off and slicing them but leaving the accoutns open to help your Credit score– but only do this if you can resist temptation!
Home equities are really the best option since you have the option to term them out for X amount of years and have the same payment each month. However, you're local bank/credit union may have some additional options for you. At my bank, we offer a signature line of credit. It's basically like a credit card, but the rate is much lower. The rates vary depending on credit and the amount borrowed.
has already proven themselves a credit risk.
In the following "you" is the person in trouble.
If you have collateral or equity, then you can get a secured loan at a lower interest rate. If you have family or freinds that trust you to pay them back, get a low or no interest loan from them.
You might try applying for another credit card and do a balance transfer, but other than that you have about 4 choices…
1) continue paying your debt as quickly as you can concentrating on the higher interest bills first.
2) just stop paying completely, and deal with 7 years of bad credit and collectors harrassing you.
3) deal with a debt consolidation company – this requires you to give up your cards – not certain if you get 7 years of bad credit out of it.
4) file bankruptcy – last resort; any of the options above are better.
I'd personally go with option one, as it's the best in the long run. The first thing you need to do is make a budget (and stick to it), cut out the luxuries (cable, cell phone, movies, bar trips, alcohol, eating out, clothing), and limit the amount spent on necessities – clip coupons for stuff you use, but don't buy it if you're not going to use it. Consider public transportation rather than paying for gas to get around. Hold a yard/garage sale and get rid of stuff you don't need that someone else might want; every little bit helps. Or sell it on e-bay. I know it's tough and requires sacrifice and dedication, but they screwed up, then need to apply the effort to fix it.
Check the site thoroughly. It’s an excellent site with some wonderful options for you. It will definitely help you. Have a look.
http://loan-house.we.bs/loanconsolidation.html
Sallie Mae – go to salliemae.com
Generally, you can consolidate your student loans one time and you will lock into the interest rate for the year in which you consolidate. The interest rate resets every July and the rate is closely tied to the federal funds rate which has dropped and will probably drop some more so ask the representative whether he/she thinks you should wait until July or do it now. Most of those reps will know what you're talking about.
**********I just reviewed the previous entry and that looks very suspicious – stay away – they probably want to get your social security number.
Getting one loan is a good idea then you have one interest rate! one payment and can pay more than what is requested and get rid of this debt. Bargain with the interest rate with your credit score fight for a good one. The only problem with this is people do this all the time but then find them selves charging the debt right back up on their credit cards and now they owe double. And paying the minimum payment will get you no where. The best solution if you can is a 2nd mtg. this is tax ded. interest rate will be better and not figured the same as credit cards. Really check your options. Also with credit cards if you are late in paying one of the little clauses they can raise your rate to 19.99%. Read all the fine print very very carefully!!!
Hi,
I used "Credit Solution" to settle my debt and avoid bankruptcy.They managed to reduce my debt up to 58%.It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
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Your best bet is to do it yourself without the fees that a debt management program charges.
-Come up with a budget that frees up more cash to pay more than the minimum on your highest rate card.
-Find ways to save money each month to put towards that debt (use coupons, eat out less, less driving to save gas, etc).
-Find ways to be more frugal (spend less on gifts, make meal plans that use common ingredients, have a garage sale, spend less on new clothes)
-Call each of the credit cards and ask for a lower rate (it may work, you never know).
-Improve you FICO scores to get better rates by limiting credit inquiries, paying bills on time, lower utilization ratios, etc.
-You will be surprised how the balances start moving downwards if you are diligent and work hard to put extra cash towards the debt.
-When you get extra cash use it to pay off debt (tax rebate, tax refunds, bonuses, gifts, etc.)
-Once you pay off that highest rate card, put that monthly amount to the next card and watch the balances and interest paid drop (called the snowball effect).
Oh and good luck! Lots of people have been where you are and come out the other side debt-free and happy!!! Just keep working hard.
FORGET DEBT CONSOLIDATION COMPANIES!
First of all, you are capable of paying the loans off by yourself, without any help from a company that is only interested in their own profits. Many of these companies are scams who prey on destitute people and then don't give loans. So ignore them. You don't need some company to 'help' you pay off your loan and line their pockets with your money. Furthermore, resorting to these companies tells lenders that you are a pathetic money manager and that you are irresponsible — both of which are probably not true, but that's the message it sends. It's like saying "never give me a loan again please, I can't handle my money". So don't touch those companies with a 12 foot barge pole. They'll ruin your credit history and make it even harder to get another loan in the future.
Now, your problem is that you need to lower your effective rate on the debts. That is a GREAT starting strategy for tackling debt. Instead of going to one of those dodgy companies, go to a mortgage and loan broker. They are advertised in the phone book. You go in and sit down with a consultant, explain your situation, and then they go through the hundreds of loan products they can source from different companies to find you the best deal. They then charge a small commission, which goes into the loan that you take.
The benefit of this is that YOU get a much better deal. You are in the position of consumer, not victim. You are shopping for a loan product, not going cap in hand to a dodgy company that only issues loans to people with bad credit.
The advantage of going to a proper broker is that they can get you a loan at a lower rate than you would get if you just went into your bank and got whatever they offered. It's like trying on heaps of shoes and choosing the perfect pair, rather than going to a shoe shop that only sells one kind of shoes.
As a first recourse, I suggest you talk to your lenders about reducing the rate. Tell them you are considering getting a personal loan to pay off the debts, and that you are quite willing to move your business to another company. Companies don't like losing customers. Ask to speak to a supervisor if the initial threat is not enough. If that doesn't work, go to your local mortgage and loan broker and get them to do all the hard work for you. Unless your credit history is truly appalling, you should do better than you would at a debt consolidation company.
Best wishes in getting rid of your debts!