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Debt Consolidation Loans - How To Get One
With the economy in crisis and job layoffs on the increase, many are scrambling to consolidate their debts. The main advantage of obtaining a debt consolidation loan is the ability to deal with only one creditor instead of many. Also, since interest rates are at an all time low, the new loan may have a much lower interest rate than the previous debt loans. Of course, you will save money overall too, because it’s cheaper to pay interest on one loan than it is to pay interest on many different loans. When you make the decision to seek a debt consolidation loan, you usually don’t have to look very far. This is because debt consolidation loan companies are usually looking for you. They are in the business to make money and they do make money on the interest you pay them. They are especially aggressive when it comes to looking for homeowners, because they don’t risk losing anything if they can collect your home if you can’t make your payments or default on your loan. Television ads, radio ads and direct mailers are frequently and loudly voicing their offers to help rid you of your debts. Some of these companies secretly incorporate very high interest rates or hidden fees, so be cautious when choosing a finance company to consolidate your debts.
Start at Your Own BankYour bank is a good place to start if you have a good credit score. Interest rates at a bank are traditionally lower than with a finance company, so if your credit score is at least 625 or more, check with your bank first. Applications for a bank consolidation loan usually only take about thirty minutes to fill out. Bring with you a letter from your employer that verifies your employment status or your most recent paycheck stub that shows year to date earnings. If you have letters of credit from other lenders, those are good to bring along with you to the bank or other lending institution. You will also need your most recent credit card statements, or loan payment books so you can show them who all you owe and how much you owe them. Applying For a Debt Consolidation LoanWhen applying for a loan, seek to obtain a loan that will be paid off in the shortest amount of time. If at all possible, try for a three year debt consolidation loan. Even though the payment for this type of loan will be higher, remember you are consolidating all your debts into one, so your monthly budget will still be easier after you have consolidated. The objective is to get out of debt sooner, not later. There are also non-profit agencies and organizations that offer debt consolidation loans. Some of these ask for a voluntary contribution to be added to your monthly payment and some do not. It depends on the organization. These lenders will negotiate with your creditors to lower your interest rate or possibly even remove it completely. Creditors are usually willing to cooperate, because they fear you may file bankruptcy if they don’t reduce your debt. The following links will provide some information on non-profit lenders. ConsolidateCredit.org |
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