Bad Credit Loan Consolidation Pros and Cons


Due to these recessionary times and the uncertainty of the national, or even global, financial future, many people are considering the assistance of a certain financial tool – debt consolidation. Caution is advised when shopping – and that is what you have to do – when looking for an appropriate lender. A great deal of disinformation is floating around out there. You will find it in advertisements, internet venues, even financial magazines, and even from friends or colleagues.Unscrupulous LendersSome of this wild information is used simply to strike unwarranted fear in consumers so that they will make quick and unthoughtful decisions. Unscrupulous types always prosper when bad news drives folks to become overly nervous. A good example outside the financial realm is a practice exercised by unscrupulous contractors who prowl neighborhoods after a bad storm, offering quick repairs at very low prices. The work is usually never finished; if it is, its shoddy nature is disguised, and the contractor just disappears. The phone number given the unsuspecting homeowner, usually on a piece of scrap paper, turns up disconnected or forever unanswered.With money as the powerful driving force, some shady characters may try to steer folks away from legitimate consolidation loans by offering so-called insider information and then steering them to impossible loan services with phenomenally low interest rates. Contracts of this nature seem to have more than their fair share of fine print. Suddenly, interest rates can soar. The sneering lender will point to the fly-specked contract. So, carefully abide by that old stipulation – read all the fine print. Nonpayment, against however unfair the contract, will most often see the borrower responding to a summons and ending up in court.Simplifying for Peace of MindAside from the usual warnings about contracting loans, debt consolidation can usually be very beneficial to a cash-strapped individual. The smart borrower should shop extensively for lenders offering acceptable interest rates and conditions. The more prospective lenders the borrower gathers, the better the chances of finding the lender most qualified to meet their needs.Consolidating loans can even help improve a credit rating over time. Also, instead of meeting the payments of a number of creditors every month, juggling the various amounts due, interest rates, and dates due, and putting up with uncomfortable pay -up phone calls and messages, the consolidation loan can put all these annoyances into one simple, manageable package. Legitimate debt consolidation packages can lead to significantly lower interest rates. Harassing phone calls will end. Terms may cause the debt to be cleared up more quickly than with numerous creditors. Often, if settlements for each creditor are pursued, actual debt could be cut almost in half.A Few More CaveatsAs you shop, it is a good idea to have copies of your credit records. Using these, a prospective lender will probably not make what is called a hard query against your credit report when they are preparing their bid documents for you to consider. When you have your lenders whittled down to two or three, then they can start making hard queries. A lot of queries against a credit report can mean the credit ranking taking some hits that lower the score. Getting a scrupulous lender bears mentioning again, as does the need for extensive shopping for the lender who best suits your needs. Debt consolidation can ease your monthly debt hassles, can improve your credit rating, and offer substantial peace of mind. Shop wisely and your life can become a lot more enjoyable.