Category: Debt Consolidation Loans

Numerous Ways to Clear Debt

Many individuals find it difficult to avoid a transforming debt into wealth scam, and this is especially true for those who have a lot of credit card debt and other similar obligations. People who target consumers for such scams typically tell them they can become wealthy if they allow a third party to talk to the credit card companies on their behalf. Anything that seems too good to be true probably is, and people in the aforementioned positions should think carefully before becoming involved in such a venture. The best way to find out if something will actually work is to inquire about it from those who have already participated in the program and can subsequently speak from experience. Many individuals have had past debt problems and have found a way to change their luck by obtaining help from those who can offer clear debt solutions rather than false promises. Many lenders will agree to work with those in debt if they see that they are willing to attempt to pay.

A transforming debt into wealth scam might claim that a person can get wealthy from the aforementioned venture, and while this is not entirely true, there are advantages with certain companies that can work in one’s favor. It is always in one’s best interest to have a representative fight on his or her behalf and make negotiations with the credit card companies to which the money is owed. This liaison person will work to discover the amount of money for which the credit card company or other lender is willing to settle. If one has an amount in mind, he or she can use this service in order to assist with shrinking the overall amount that is owed. Outstanding debt affects the profit of credit card companies and it is for this reason they are willing, many times, to settle for less in order to recoup at least some of what is owed. However, it is best for one to hire an experienced person to help them deal with such negotiations. The best way to eliminate debt is to take advantage of methods that have proved successful for others.

Small Business Debt Consolidation Loans and Programs

Usually sometime in the first one to two years of a business’s life it’s going to run into some serious cash flow challenges. This is even true for businesses with a great product whose sales jump up to health levels right away. What many people don’t realize about running a small business is that success can be expensive. Often business owners have to borrow money to stay ahead of demand, and borrowing money often leads to trouble. If a business owner can’t manage her monthly debt service a small business debt consolidation may be her only solution.

A small business debt consolidation loan often behaves in a very similar way to consolidation programs that individuals with too much debt go through. Meaning, the business contracts a company to approach its creditors and begin a negotiation process that results in either a) lower principle balances on the loans, b) lower interest rates on the principle, or c) both.

Banks are willing to work through these negotiations once the consolidation company makes it very clear that the alternative is to have the business owner essentially walk away from the loans, leaving the bank with nothing. It’s a situation where the bank realizes “this is the best we’re going to get, so we’d rather take 40 cents on the dollar than get nothing at all.”

Since the business owner ends up fulfilling something other than the originally agreed-upon loan terms, his or her credit rating will be affected. If the loans are in her own name, her personal credit score will take a dive. If she borrowed the money through her corporation, then any corporate credit she’d established will take a serious hit. If you go through a small business debt consolidation program you’re not likely to be able to borrow any more money for your business for a long time. That’s something to consider before you take on the risk of business loans in the first place.

One thing to consider is that small business debt consolidation loans aren’t for you in the first place. Even if your loans are starting to overwhelm you, a consolidation company may not be able to improve your situation much. For example, if your interest rates are reasonably low, consolidating all your balances to one won’t make a significant difference. If you can’t get a reduction in principle there’s really no point consolidating your business debt, so keep that in mind.

Overall, borrowing money for something as risky as a business startup isn’t something you should do unless you’re very confident the business will be able to make the payments on the loans. Starting a business is stressful enough without having the added worry of not being to keep your payments current.

Low Interest Debt Consolidation Loans – Educate Yourself Thoroughly

Human beings gravitate toward anything we perceive to be faster and easier. We like to simplify, streamline, and automate. It’s true of every aspect of our lives, and it’s especially true with how many of us want to deal with our outstanding debt. Many people who have multiple credit card balances, car payments, student loans, etc find it extremely appealing to have somebody else do the dirty work of dealing with our debt – so we go hunting for low interest debt consolidation loans.

On the surface, a low interest debt consolidation seems like it would be an absolute heaven-send. We get our ugly, disorganized high interest loans and their inconvenient payments turned into one smooth-sailing payment that we’re told is extremely low interest relative to what we’re paying now.

Here’s the problem – if you’re hunting for a debt consolidation with a low interest rate, it probably means you’re dealing with high interest rates – and several of them. You know what that means? It means you’re a credit risk. Somebody has to pay the piper, and your creditors aren’t just going to take massive losses just because your debt consolidation company asks them to. So while all the advertising may say that you’re going to be getting a killer low rate, read the fine print. You might be getting some kind of introductory rate and soon after it will be bumped up – sometimes as high as credit card rates.

Another thing I recently learned about these supposed debt consolidation loans with low interest is they often carry fees; fees that can run as high as 10% of the monthly payment on the consolidation loan. So if they get you to a $500 payment, you’re looking at $50 per month just for the privilege of having them receive a payment from you and then send it on to your creditors. By the way, they’re getting it on the other side as well. Your creditors, so excited to be receiving payments consistently, will often pay the consolidation provider an additional 10% to 15% fee. Suddenly it seems like this would be a good business to be in, but I’m not so sure it’s something where you want to be the client.

What you might not realize is that there are plenty of ways for you to take yourself through the exact same process that any company could as far as making your payments and paying your highest interest balances first. You’re very likely paying for something you could do yourself, and by doing it yourself you’d probably learn valuable lessons about how to avoid ever being in this kind of debt situation again.

Low Interest Student Loan Consolidation – Fact and Fiction

As the cost of a university education climbs relative to the amount students can borrow through federally subsidized programs, it’s becoming more and more common for students to use a mix of federal and private student loans to finance their education. The availability of private student loans can be viewed as a positive in that it allows more people to complete their education, but there are some real negatives to private education financing as well.

My biggest concern, as one who got out of school relatively recently, is that student loans are universally thought to carry low interest rates, but that’s not necessarily true with private student loans, whose interest rates are determined by the lenders. The idea that all student loans are low interest comes from the fact the government controls the amount of interest charged on federal student loans. We need to make sure that distinction is clear in the mind of the average student, because I’m afraid many students take on private financing they might not need based on the idea that they’ll be able to go through a low interest student loan consolidation with all their loans. That’s obviously not the case, and if these kids aren’t careful they’ll end up with payments that cripple them financially just as they’re trying to establish themselves in the professional world.

If you’re a student, or if you’re researching the subject on your child’s behalf, you really need to understand why a student loan consolidation with low interest is rarely possible with private loans.

With a private student loan consolidation, all that’s really taking place is that you’re combining your private loans into a single balance with one payment, one interest rate, and one repayment period. The interest rate on that single loan may or may not be lower than the rates you were all ready paying with your unconsolidated loans. It will completely depend on your credit score and the offer the lender makes you. The only way you’ll see your payment go down after the consolidation is complete is if the lender does happen to offer a lower rate or if you restructure the repayment period so the loan will be repaid over a longer period of time. That kind of restructuring obviously won’t mean you’re paying less interest – you’ll actually be paying more because you’re dragging the loan out over more years.

Here are some general ideas as far as the terms of the loans you’ll get through a private consolidation:

  • 15 to 30 year maximum repayment terms.
  • interest rates between Prime+1% and Prime+6% (not so low really).
  • minimum balances of $5,000 to $10,000 to qualify for consolidation.
  • maximum balances of $100,000 to $300,000.

It really pays to manage your money well while in school; the payments on these kinds of loans will be relatively steep. If you’re the kind of person that wants to follow your passion in your career, instead of having to chase a big paycheck, I’d really encourage you to absolutely minimize the amount you borrow.

Debt Consolidation Loans for Bad Credit

“Consolidation” is term you hear all the time in the world of loans and financing, but you may not be aware of exactly what goes into debt consolidation loans for bad credit. Although I’ve never had the need to go through the process myself, I wanted to be able to put together a good article to let you know what you’ll be facing if your unsecured debts and credit cards become too much for you to handle.

In order to research this article I took the time to work through an application on one of the more popular debt consolidation sites, and here’s what I found:

First, they asked me a series of questions about my current financial situation and my debt. For example:

  • They wanted to know where I am with my monthly payments and other bills (can I keep everything current easily, are things getting tight, or are the creditors starting to ring my phone off the hook).
  • They wanted to know the main reason I’m looking for a debt consolidation loan with bad credit in the first place (unemployment or reduced employment, death or divorce of a spouse, unexpected increase in expenses…things like that).
  • Finally, they wanted to pull my credit report to see exactly where I am in terms of my debt and interest rates. I’m sure they take that information and plug it into a formula to determine whether I’m a good candidate for their program.

I’ll tell you that my general sense of this company, and of the debt consolidation industry in general, is that they really want to help people. They’re not the ones burying you in debt; they’re the ones trying to help you get out from under the debts you have. It’s nice to see that there’s a company in the financing industry that actually has people’s best interests in mind instead of trying to make them even worse off.

When you go through a debt consolidation program I would also strongly suggest that you take advantage of their credit counseling program. You got into a situation where you need a debt consolidation loan with bad credit due to lack of discipline, lack of education, bad circumstances, or probably a combination of all three. A good credit counseling and personal financial management course will protect you from ever having to go through something like this again.

Getting the Best Student Loan Consolidation

More than likely you’re going to be dealing with your student loans for the next 10 to 20 years, so you want to make sure you get absolutely the best student loan consolidation plan possible. Unlike other types of debt, almost everyone consolidates their student loans, and it’s really profitable for lenders. Those factors add up to the reality that you’re going to get a good deal if you just know what you want and what to look for.

Step A1 before you even talk to any consolidation companies is to decide what your priorities are when it comes to consolidating and paying off your student loans. You might not have realized this before, but depending on your priorities you can either go for a really low interest rate via your consolidation, or you can go for an actual reduction in the principle you owe.

So how does that work? If your goal is to pay your loans off over a longer period (like 15 to 20 years) then it’s probably wiser to go the traditional route and just go for the lowest possible interest rate.

On the other hand, you might be one of those high achieving people who landed a sweet six-figure salary out of school and you’re looking to pay off your loan as fast as possible. If that’s the case you can actually ask for a reduction in balance as part of the consolidation process. The lender will be willing to lower your principle amount because a) they’re going to keep you at a higher rate, and b) they’re going to get their money from you more quickly because your repayment period will be shorter.

Either situation can be a win-win for you and the lender, you just need to go in with a good understanding of your priorities.

One note of caution: whether you take the lower interest rate or the lower principle amount you want to make sure those benefits are completely permanent! You don’t want to get five years into your repayment plan and then have them stick you with an inflated rate!

Here are a few of the benefits that will come with any student loan consolidation program (because they’re guaranteed by law):

  • No penalties at all if you’re wise enough to pay your loans off early.
  • No credit check whatsoever (talk about a bonus!).
  • No upfront fees (good luck finding that with any other kind of loan consolidation – yeah right).
  • Unchanging interest rates. Once you’re locked in, you’re locked in.
  • An automatic reduction in your interest rate of .6% if you consolidate within your six month grace period after leaving school.

One benefit you should really look for with your student loan consolidation plan is a discount given when you set your monthly payments up on automatic withdrawal. It’s good for the bank because they don’t have to chase you for payments. And it’s good for you because you make your payment on time, every time, without having to think about it!

Consolidate Private Student Loans

The time just before and just after college graduation is chaotic to say the least. You’re making plans for graduation, double-checking your transcripts, polishing your resume, interviewing for jobs (hopefully), and looking forward to starting your life as a full-fledged grownup. But along the way, don’t forget to consolidate your private student loans. It’s one of the most important financial moves you’ll make as you start your professional life.

I remember when I went through this process – without the consolidation my interest rate was going to be something like 6%. After consolidating my private student loans was around 2%. Let’s do the math. If  you graduate with $20,000 in loans, your situation could look like this without consolidating:

$20,000 to be repaid over 10 years with 6% interest creates a monthly payment of around $222. By the time you pay off the loan you’ll end up having paid over $6,600 in interest on your education.

The same loan balance and repayment period with a 2% yields a payment of around $184 and costs you only just over $2,000 in interest over the life of the loan.

Now, if you took the extra $38 per month and saved it at 5% interest during that same ten years, you’d end up with over $5,700 in savings. So you save $4,600 in interest and you get to have an extra $5,700 in a savings account. That’s a swing in your favor of over $10,000. Are you starting to understand why it’s so important to consolidate your private student loans?

Here’s how it will work. Your loan payments aren’t going to be due until six months after you’re no longer a full time student (hopefully that means six months after graduation, right?). During those six months you’re going to get plenty of offers in the mail offering you great deals on student loan consolidation loans. Do not accept the first one. In the age of the internet, take the time to research the companies that are contacting you. Check them out with the Better Business Bureau, and see if you can find any reviews on third party sites written by their current customers. You’re going to be married to these people for a long time, you want to make sure they’re above board and they’ll take care of you.

Also look for a consolidation company who will give you a further interest break if you set up your payments on your bank’s bill payer. Not only will that save you some interest, it will protect you from messing up your interest rate and your credit by making payments late or not at all.

Now, go enjoy adulthood! You’ve worked hard to graduate and get where you are, now keep progressing and enjoy your life.

Bad Credit Debt Consolidation Loan

One of the most overwhelming feelings in the world is to owe debt to multiple creditors and start to fall behind on the payments. At a certain point it’s nearly impossible for a person to keep their debts current. If you have several credit cards, a mortgage, a car payment, student loans, etc it can be really difficult to stay ahead of your bills – especially if you go through any periods of unemployment.  Just the credit cards will be nearly impossible to maintain if you miss a payment or two and your interest rates jump to 30%+. Soon your credit is damaged and you need to be looking seriously for a bad credit debt consolidation loan.

Debt consolidation loans for people with bad credit won’t necessarily improve your credit score, but they do put you on the path to recovery. After all, if you can’t wrangle your monthly payments you’ll never be able to repair your credit. Here’s how it works:

You begin working with a company that specializes in debt consolidation, and you basically turn all your debts over to them. They take the responsibility of going to your creditors and saying “Listen, this borrower is in way too deep, so you have a couple of options. You can either get nothing (because the borrower is going to file bankruptcy) or you can get a certain percentage of your money back from us. Then we’ll deal with the borrower.”

The lenders don’t want to lose everything, so they’ll usually agree to take a certain percentage of your balance and close the loan. After the debt consolidation company has settled with your creditors, they roll all the remaining balance into bad credit debt consolidation loans for you and their other clients. Instead of having multiple payments every month as well as interest rates all over the place, you end up with a single payment and a single interest rate. It’s a thousand times easier to manage. Although you’ll still have some stress related to your worsened credit score and the new loan you’ll be paying on for several years, at least it will all be in one place. Now the key is to never miss a payment.

There’s a lot of debate over debt consolidation loans with bad credit. Many people feel we’re not helping you out at all by bailing you out of your situation, but they need to acknowledge the reality that without these loans you’d walk away from 100% of your debt eventually, and if that happened on a large scale our credit system would break down in a hurry, so debt consolidation loans for people with bad credit are probably more important than we realize.