Debt consolidation loans simply put, are refinancing agreements under terms and interest rates you will find more manageable. It works for those who have expensive unsecured debt, like credit cards and car finance.
There are several situations that may call for debt consolidation loan. Try this simple interview and answer the following questions:
- Are you able to pay your loan bills on time, or even ahead of schedule without straining your budget?
- Are you able to save money after paying your bills?
- Can you handle creditors knocking on your door? Do you have a lawyer? Can you afford a lawyer?
If you have answered “No” to all questions and you can personally relate to the situations mentioned, then this is an option you should give serious thought. It’s better than having the threat of a law suit hanging over your head all the time. In addition, if you instigate the move for debt consolidation loans, the creditors will do a double take and start treating you like a good paying customer.
How Does Your Debt Get Reduced With Debt Consolidation Loans?
Before you think that the consolidation loans will cut a percentage off your existing debts, it isn’t that way. You get to reduce your debts through smart financing. This means that your debts become easier to pay off because of a fixed interest rate and the absence of late charges and compounded interest. You also protect your credit ratings which can be severely hampered with a bad loan history.
Furthermore, the principal amount you owe will be easier to manage because you can arrange for a fixed monthly payment under a new loan period without having to pay a penalty.
The Benefits of Reducing Your Loans
Consolidation agreements have several benefits ranging from tangible to intangible. However, these benefits will depend on your choosing the right deal, and financial group to work with. The good news is that you have the luxury of being able to choose your new financial agent. The Internet will be your source of financial companies and the competition for new clients is quite fierce and competitive. Some of the benefits you can enjoy are:
- Less stress and worry. You can stop looking over your shoulder or feeling helpless about the endless monthly bills that stream through your door like clockwork
- You can enjoy lower interest rates which is a good concession to a new loan under a lengthier loan period
- Those collectors that bother at all hours of the day and night will stop
- You will value the effort it takes to earn money, and be more careful about your spending habits. You will also be more careful about monthly budgeting and impulsive shopping decisions
- You’ll learn to pay in cash instead of credit all the time and with that comes a sense of financial maturity
The Realities of a Debt Consolidation Loan
There are fees that will be added to your existing loan amount as part of the service fee. In many cases, this is what you are paying for initially. You will notice that the principal amount remains the same in the first few months as what is collected are the service fees.
You will also find out that not all loans can fall under this type of refinancing. If your loan amount is deemed too small by financial companies offering debt relief, you may have to find another solution. However, before you feel discouraged, ask. There are many reputable companies offering loans to consolidate your debts who are more than willing to discuss terms with you and devise an effective yet affordable solution whatever your circumstances. If you are interested in hearing more about Debt Consolidation Loans and want to know how much you can save, click here to get a debt consolidation quote or to call us