Jan
31
Debt Consolidation Loans Can Resolve Bad Credit Debt
January 31, 2007 | Leave a Comment
Replacing several high interest loans or credit cards with one consolidation loan can not only lower your monthly payments, but also save you money due to the lower interest rate on the new loan.
Look at the rates you are paying on your unsecured debts, i.e. credit cards with a rate of between about 13% and over 35%. These are obvious replacement loan candidates. Auto loans and store credit cards are other loans that should be paid off.
If you can get a second mortgage or refinance your current first mortgage, use these funds to pay off these unsecured loans. You should be able to currently save several thousand dollars in interest payments alone. I am assuming a total loan amount above the home debt to be about $20,000.
The other advantage to this plan is to reduce your monthly payments by a substantial amount. This also should allow you to gain a payment schedule that you can easily meet and even reduce quicker over time. Make sure you can pay off this new loan with extra payments with no penalty. It is a good place to put some of that extra money you have each month.
This idea also takes some solid research on your part. All banks and mortgage companies do not operate the same way. Also you want to find the best rate you can get for your debt structure.
Look to these sources for your consolidation loan: Local banks, local mortgage brokers, and the newest provider for these loans, the internet loan providers. There are many companies fighting each other to make these loans to folks like you. Take advantage of your popularity.
Sometimes, debt consolidation companies can discount the amount of the loan. The debt consolidator will buy the loan at a discount, usually when in danger of bankruptcy. The wise debtor can easily shop around for consolidators who will pass along some of the savings. Consolidation usually affects the ability of the debtor to discharge debts in bankruptcy. It’s prudent to weigh this decision rationally.
Take your future in your own hands and make this happen for your financial health. Saving money and paying off your debts faster will open your life to a freedom you have not enjoyed for a long time. A family with minimum debts has eliminated a potential family problem and replaced it with freedom. Do your self a favor and become debt free.
Connie Barker is the owner of several financial websites including those which deal with Debt Consolidation Loans.
Popularity: 100%
Jan
31
Free Debt Consolidation Services - Are They Really Free?
January 31, 2007 | Leave a Comment
Advertisements for free debt consolidation are popping up everywhere, but they bring up the vital question, “Are they really free?” How can a service afford to offer free debt consolidation? If they aren’t making money, how can they stay in business? To learn the answers to these questions, you need to understand how a debt consolidation service works.
Debt consolidation companies negotiate with your creditors.
When you work with a consolidation service, they talk to your creditors and negotiate to lower your debt. After they have negotiated to lower the amount you owe, with each of your creditors, you will notice that the amount of money you have to pay out each month is significantly lower than it was.
Debt consolidation companies don’t give you a loan.
When you work with a debt consolidation company, they don’t give you a loan that you then repay to them. Rather you make one monthly payment to the company and the company then distributes that money out to your creditors according to the terms that they negotiated. The single monthly payment you make will be lower than the total of payments you were making to all of your creditors and by following the payment schedule, you will pay off your debts sooner.
Debt consolidation companies do charge a fee.
When you send your monthly payment to the debt consolidation service they do take a fee from the amount you send to cover their services. Over the life of their services, the fee that they take should add up to less than the amount of money that they saved you by negotiating to lower your debts. Because you end up saving money by working with a debt consolidation service, the money that they do take did not come out of your pocket, but rather out of the money that they saved you, so that is why debt consolidation services can claim that the help they provide is free.
Go to http://www.debtsanity.com for more information on Free Debt Consolidation Services.
Popularity: unranked
Jan
30
Debt Consolidation Online - Is It Smart To Consolidate Your Debt?
January 30, 2007 | Leave a Comment
With a multitude of bills piling up, debt consolidation can appear to be an easy way out. Claims of reduced rates and one payment convenience can seduce just about anyone. But before you commit to such a plan, make sure that you have weighed the pros and cons to make certain that you
will actually save money in the end.
Is Debt Consolidation Always A Good Deal?
Debt consolidation rolls your short term debt, such as credit cards accounts or bills, into one loan. The idea is to reduce your interest payments, helping your monthly payments go farther and eliminate your debt faster. But you have to be careful, because a lower monthly payment or interest rate doesn’t always mean you are saving money.
Time is your enemy with debt consolidation loans. The longer your loan period, the more you will pay in interest charges. For example, $20,000 in credit card debt at 15% for 5 years will cost $8,547.91 in interest. Consolidate that debt into a 30 year home equity loan at 6% and interest charges soar to $23,167.72.
Other Reasons To Consolidate Debt
But saving money isn’t the only reason to consolidate debt. Reducing your monthly payments through consolidation can help you get through a job loss or health crisis. Taking a look at the previous example, the monthly payment on the credit card debt at 15% would be $475.80. Convert that to a 30 year loan, and the monthly payment drops to $119.91 - a difference of $355.89.
The Elements Of A Good Debt Consolidation Loan
To see a savings with a debt consolidation loan, make sure you find a low interest, short term loan. Home equity loans with 5 to 15 year terms offer reasonable rates with few fees. But if you only have a few thousand in debt, opening a new credit card account with 0% on transfers would be a better option. Before signing with any lender though, make sure you do some comparison shopping to ensure you are getting the best available financing.
With more room in your budget, work to make additional principal payments to save on future interest charges. You will also want to check out your credit report and possibly close some accounts to improve your credit score. Just remember to keep your longest held accounts open since
a long credit record improves your score.
Go to http://www.debtsanity.com for more Debt Consolidation Advice.
Popularity: unranked
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