What is a Debt Consolidation loan?
Debt consolidation is basically placing multiple debts with one lender in the hopes of getting the total monthly payments and interest rates lowered. Today's economy is overwhelmed with consumer debt. To often credit card companies send offers to young adults with offers that sound like free money. While the truth is these cards come with high interest rates and every payment that is late the interest rate is skyrocketing. Soon the payments are only paying on the interest and not the actual loan itself.
Unexpected hurdles happen in our lives, like job layoffs, hospital bills or that unwanted car repair bill. We have no control over these events but our bills remain constant. If they are not deal with in a timely fashion they will develop into a huge problem that will be hard to eliminate.
These accumulating debts will not just magically disappear. They need to be deal with immediately. If you find yourself in a position in which it is impossible to make the monthly minimum payments on debts such as mortgage, car payments or credit cards then a debt consolidation loan may be a perfect solution for you. By consolidating these debts it should reduce the total monthly amount paid out and reduce the interest rates. It will also be convenient because there will only be one bill to pay every month instead of several.
There are several Options Available A secured loan that will most certainly guarantee a lower interest rate. This is because the lender will be more comfortable because the forced sale of the collateral will ensure payment on the loan. However some of us do not have the means in which to secure this type of loan. Therefore an unsecured loan will be your option. There are even loans available to those who have bad credit. Look at every option available to you closely and read every last word in the fine print. Understand completely what you are getting. There are many legitimate companies and debt consumer groups out there but there are also several that thrive on your fear and they can not wait to cash in on your feeling of inferiority. Educate yourself. Knowledge will give you the confidence to overcome this fear. The person in front of you making you feel nervous may well be in your position in the near future. For that matter matter how do we know he is not worse off than you are right now.
How Do I Choose a Debt Consolidation Loan Company?
1. Do diligent research on the companies you wish to do business with.
2. They should be part of the Better Business Bureau and have referrals.
3. They should have credit counselors who have been trained and certified.
4. They should offer educational resources about debt consolidation, money management, paying bills on time, budgeting and several other financial issues.
If you answered yes to even one of these questions then it would be at least worth the time to look into a debt consolidation loan. Debt consolidation can be a different solution rather than bankruptcy ruining your credit however this may solution stop you from dismissing some debts during bankruptcy. Make your decision out of education and knowledge, not out of fear and desperation.