Interest payments, mortgages, loans, and more and more bills weighing you down every month? A credit debt consolidation loan could be the answer to all your problems.
With multiple loans and payments, it is possible that you may miss a payment or not be able to keep track of all of them together. This may lead to even more fines, and a credit score that will take you years to repair. Managing your finances with too many payments is also a problem as you’re not sure whether to make only the minimum payments every month, or concentrate on paying off your biggest or smallest amount first. Allocation of your financial resources in a multiple debt situation makes the problem even more complicated.
Consider a credit debt consolidation loan as a single bigger loan to take care of all your other smaller loans, mortgages, credit card debt, and every other payment that you have to make every month. A debt consolidation loan generally offers you a larger time period and smaller interest payments every month. Instead of making huge spreadsheets with the principal amounts and the interest due, you only have to make one single low interest payment every month.
Why get a credit debt consolidation loan?
- Single payment: There are no multiple payments with lots of bills and loans to take care of. Since there is only payment to make every month – the monthly payment of your consolidated loan, there is no chance that you may end up missing it.
- Lower interest rates: Credit debt consolidation loans usually offer you a lower rate of interest than what you have on your loans and bills, making it more manageable.
- Better credit scores: Since your payments are consolidated and manageable you will not have a problem paying the interest on your credit debt consolidation loan. Your credit score therefore will remain in good stead.
- Cut the stress: There are no calls by credit companies reminding and harassing you to make your payments on time.
- Prevents bankruptcy: In the worst-case scenario, credit debt consolidation loan is a better alternative to filing for bankruptcy.
What to look out for when getting a credit debt consolidation loan?
- Lower interest rates: Make sure that the interest rate on your credit debt consolidation loan is lower than that on your current debts. If you are stuck with a high rate of interest then it will not solve any of your problems.
- Collateral requirements: If you have bad credit then collateral or a mortgage may be a requirement before you apply for a credit debt consolidation loan. If you are not up to date with your payments, then you stand a chance of forfeiting the mortgaged property also.
- Loan term: An extended loan term might mean lower monthly payments. And this might be the option you want.
- Terms and conditions: Be sure to read and understand all the terms and conditions before zeroing in on a debt consolidation loan.
You might also consider other options like a debt elimination program, credit counseling etc before you settle for a credit debt consolidation loan.
How to go about getting a credit debt consolidation loan?
Decision that a credit debt consolidation is the best way out means that only half your work is done. Here is how you go about it:
1. Secured loan: Bad credit should not come in the way of a debt consolidation loan. A secured loan may be your best option in case you find that the rate of interest on your consolidation loan is exorbitant.
2. Go for a reputed lender: Research, ask your friends and family, and get expert advice – before you settle on a lender. Just because you are getting a low rate of interest from a particular lender, does not mean that you don’t check their credentials. Other factors like reliability, repayment period, and customer service also matter just as much.
3. Get the papers ready: After you have decided on a creditor with the most favorable terms, and inquired about their standing in the market, it is time to get all your documents in place. You will need to submit papers and details regarding all your loans, credit card payments, bills, mortgages etc to your creditor.
4. Be regular with your repayments: The final step is obviously to begin repaying the credit debt consolidation loan. If you’re regular and up to date on your payments, you will have a much better shot at a debt-free future.