Debt Consolidation, bill consolidation or Debt Counseling, are techniques applied by financial institutions to take control and manage any outstanding debts you owe. Some examples of the forms these can come in are home equity options, unsecured personal debts, personal consolidation loans, and credit card debt consolidation loans. When it comes to paying off debt, A little preventive financial maintenance can eliminate the need for major repairs later such as bankruptcy.Debt Consolidation is a popular option in dealing with debts. Not only does it combine all of ones bills into one monthly payable bill, but also at lowered rates of interest and are even often capable of eliminating late fees from your creditors. It is much easier keeping track of one creditor and one payment than it is multiple payments. It may take longer to pay them off, but it can eliminate going bankrupt and make your life easier. Properly dealing with your debt situation can lead to financial freedom. It takes time but it is well worth it in the long run.Similarly a debt consolidation loan is a single and secured loan that helps in paying off debts gained by using credit cards, overdrafts etc. This loan then is essentially paying for your bills, while you then pay the loan off. You are responsible to the one loan. At one time it was near impossible to obtain a loan with bad credit but a debt consolidation loan is such one that can help out in such a time of need. If you are considering one of these options, be sure to talk it over with the company so you know what you are getting into, the one here provides free consultation in helping you decide which is best. Debt Consolidation is not the solution to educate you on poor spending habits but they can provide financial relief from your debt owed.
There are so many debt relief companies out there all vying for your hard-earned dollars. You need to know a little something about the ones that you select before you sign on the dotted line. The dangers of a home-equity debt consolidation loan starts off with the very nature of this form of collateral debt. Make no doubt about it you are incurring another line of credit when you take out a debt consolidation loan even though the salesman made it sound as if your past credit card and debt problems were just that, in the past.Voluntary Theft and AbandonmentWhat is surprising about individuals and homeowners, who readily put their homes up as pieces of collateral against a debt consolidation loan, is that they do this action in the very first place. Right after that, it is not surprising that many professional financial experts consider debt consolidation home equity loans as one of the most dangerous loan issues that exist today in the marketplace.Very Frightening NumbersThe reason why these debt loan professionals feel that home equity loans are nothing but stress and danger comes from the fact of the record of default of this form of loan industry. With the defaulted loan percentages hovering around the 15 to 20% mark, in reality, this means that out of 100 homeowners who took out a debt consolidation loan and used their home as collateral, 15 to 20 of those defaulted and lost their home.Surprisingly IneptThe dangers of a consolidation loan with the residence as collateral is the very fact that you can lose your home if you default on any of the loan terms. What is more distressing is that many of these debt loan contracts come with teaser rates for the first six months of the loan repayment schedule. One can just imagine the shock to the bottom line when individuals who reach that six-month teaser rate, did not realize this little fact and are then slapped with a double-digit variable rate that rises each year.At All CostsPlease be careful and avoid at all costs signing-on to a home equity debt consolidation loans experience since the result may be something out of your darkest nightmares. You do not have to put your home, the place in which you may have been in for decades, as collateral for any debt consolidation loan instrument. There are multiple options and methods, into which you can apply and be accepted, without having to put up the house and home.Debt Consolidation Loans Resources
If you are like most Americans you’ve probably racked up considerable debt trying to keep up with the Smith and Jones families down the street. According to Cardweb.com, the leading online publisher of information pertaining to credit and other payment cards, you are not alone. In 2004, individuals who earned between $75,000 and $100,000 per year, and had at least one credit card, carried an average revolving balance of nearly $8,000. This does not even include other personal debts such as car loans, which can total in the tens of thousands.If credit card debt is keeping you up at night, you’re probably wondering what you can or should do about it. File for bankruptcy? Refinance? If you refinance, is a fixed mortgage rate or an adjustable rate mortgage better? What about a home equity loan? The simplest answer of course is to get a debt consolidation loan.What is a Debt Consolidation Loan?Simply put, a debt consolidation loan lumps all of your debts together and pays them off using a single new loan. The next question of course is how to go about getting a debt consolidation loan. Visit a loan shark? Take out a second mortgage on your home? Apply for an unsecured loan at the bank and hope for the best? For the majority of folks a visit to the local loan shark is not a viable option; but taking out a 2nd mortgage or obtaining an unsecured loan from the bank are both excellent choices.Whether you use a second mortgage or an unsecured loan to pay off credit card debt, often depends on several important factors including whether you actually own a home, what your credit rating is, and what the total dollar amount of the credit card debt is that you owe to various financial institutions. According to one expert we spoke to who used to work in the unsecured loan business but now runs his own mortgage broker business, “The most important consideration is the borrowers credit history.”2nd MortgageA second mortgage is a loan or mortgage that is taken out after a first mortgage. It is similar to a first mortgage in that it uses the equity built up in a home as collateral. Similar to a first mortgage, a second mortgage consists of a fixed dollar amount that is paid out in one lump sum and repaid over a period of time typically 15 or 30 years. A 2nd mortgage may be either a fixed rate or an adjustable rate mortgage.Sometimes called a junior mortgage or junior lien, a 2nd mortgage is subordinate to a 1st or primary mortgage. What this means is that in the case of default, the lender for the first mortgage gets paid before the lender who issued the second mortgage does. As such, a 2nd mortgage is considered to be a higher risk and lenders often charge a higher interest rate; however, this rate is generally lower than an unsecured loan or the interest charged on most credit cards.Second mortgages are tax deductible, a major advantage for most people. The payback period is over a fairly long period of time so monthly payments are lower and the total loan amount is generally larger. “There are some cons to consider when thinking about taking out a second mortgage,” explains Brett Bostwick, owner of Snowbird Mortgage Company. “It takes longer to get approved, there is more paperwork involved, and because it is a mortgage loan, there are closing costs such as appraisals and title searches,” he says.Unsecured LoanAn unsecured loan is a lump sum payout that is repaid at a fixed rate of interest in equal payments over a short period of time, typically 5 years or less. Unlike a second mortgage, collateral is not necessary to secure the loan. Loan amounts are relatively small, usually less than $15,000.Interest rates on unsecured loans, which are sometimes called signature or personal loans, are determined by whether you are considered a good credit risk. In other words, the higher the credit score, the lower the interest rate will be and vice versa. A bad credit score will earn you a higher interest rate, sometimes the same or higher than the credit card interest you are paying. This is compounded by the fact that an unsecured loan is considered a higher risk (no collateral), and lenders may charge interest rates that are often quite high, generally higher than the interest rate on a second mortgage would be, but usually less than that 18%-plus interest credit card debt you are trying to pay off.Unsecured loans have a couple of advantages over second mortgages in that approval process is much quicker and there are no additional costs involved. Because the loan period is shorter and the interest rates are higher, monthly payments are also higher. Nor is the interest is not tax deductible. However, if you default on the loan, it may damage your credit but you won’t lose your home.The Bottom LineIt really depends on your situation. What is best for a co-worker or neighbor might not be the best choice for you. Most experts advise getting a 2nd mortgage if you are paying off a larger amount of bills and you don’t mind paying closing costs or the longer approval process required for a second mortgage. If you need money quickly and only have a small amount of debt to consolidate, it’s probably better to go for the unsecured loan.Of course unless you exercise restraint, change your spending habits, and stop using those credit cards, you will fall right back into credit card debt. With a little hard work and perseverance however, you will remain credit card debt free…and able to keep more of those hard-earned dollars in your pocket instead of handing them over to the bank.
What exactly is a Government Debt Consolidation Loan? Simply put, these are loans offered by several different government programs to help you pay off multiple loans. This allows a person to simply take care of only one monthly payment as opposed to two or three other different creditors. A government debt consolidation loan also allows the borrower to get lower interest rates by turning all unsecured debts into secured ones.It is students in particular who are often times offered or apply for a government debt consolidation loan. The federal government has several programs that are aimed to assist students to reduce and ultimately pay off all their debts; since students normally have student loans, credit card payments as well as having medical bills that keep them in debt. The Department of Education in particular, pays off the federal education debt and issues a brand new loan based on the consolidated amount of money of all the previous loans. This is done in part of the Direct Consolidation Loan Program of the government.The government debt consolidation loan program indeed has four plans for the borrower which namely: standard plan, extended payment plan, graduated payment plan and income contingent repayment plan. Each of these has features and aims to suit each situation of every borrower which makes it flexible enough for the borrower to pay off.Government debt consolidation loans are pretty much similar to other types of loans with the sole exception that they are given by the federal government through several government programs as opposed to the traditional lending companies such as banks or credit institutions. The one thing to lay out in the open is, and I say this because there are a lot of borrowers who fail to realize this until it’s too late, is that debt consolidation loans do not come free of charge. To put it bluntly, you will and have to, pay for this type of service. The monthly payment is very minimal of course, and government debt consolidation loans will actually help you save money in the long run as well as helping you to prevent doing any damage to your credit score.But, as a smart practice, the borrower should go and get sound advice and consulting first before coming up with the decision. Most of the existing government debt consolidation loan programs today will also get in touch with the creditors in your behalf just to make all the necessary arrangements to ultimately consolidate your debt. But you have to be prepared for the initial consultation as well. You have to make sure that you have all the information on all of your current balances and other loan information. Make sure as well that you understand fully all the terms of any contract and procedure before going ahead with a government debt consolidation loan.In today’s age where the finance world revolves around credit and loans and credit scores, where it is impossible to survive without at least one maxed out credit card in your wallet, a government debt consolidation program can be a godsend for borrowers who find themselves hip deep in high interest loan and credit card payments.
During economy crisis, the Obama’s administration has put in hard effort in assisting the citizens to go through their financial hardships. One of the most popular financial solutions introduced is the debt consolidation loan for students. Seriously speaking, many people have misunderstood this type of loan. They thought that this loan can be applied to pay back all sorts of personal debts, including credit card debts. In fact, this particular loan is only meant to reduce the students’ burden in paying back their study loan.Let’s see how this financial assistance works:
If you have few federal student loans, you can lump all of them into one single loan which is called the Direct Loan Consolidation Program. You can enjoy a much lower interest rate offered by the government. Besides, you can make your repayment plan more flexible. You are allowed to reduce your monthly repayment amount based on your financial ability. This loan can be considered a debt relief program because the fresh graduates are allowed to extend the duration of their repayment if they are currently unemployed.On the other hand, you must be extra careful if there is any financial consultant or representative from private financial institution who approaches you to promote debt consolidation loan. Do not get trapped by them. Until today, there is no such government loan provided to individuals to assist them to pay off their credit card debts or other personal loans. No special financial aid or grant is offered to the public. Hence, if someone introduces this financial assistance to you, you must remember to SAY NO. They are definitely scams.To sum up, there is no more government loan offered to public except consolidated student loan. Don’t be too happy to accept the loan if it is meant for credit card debt.
Though these loans are great for getting hold of the benefits portrayed above, there are many things that must be taken into account when undertaking student debt consolidation that may reduce or boost these benefits. Since knowledge doesn’t take up space, read on and make sure to remember these tips and tricks so you can make the most out of your debt consolidation loan:Keep your Government Loans and your Private Loans ApartFederal student loans usually come with many benefits you surely want to keep. This includes a significantly lower interest rate that you won’t be able to beat with any private consolidation loan. So if you need to consolidate your federal student loans, you’ll need to resort to government consolidation programs. Use private consolidation loans only with private student loans.Focus on getting rid of variable rate loansThough sometimes lower, variable rates tend to be a problem since you cannot predict market variations and thus your budgeting may be useless. If possible, consolidate all your variable rate loans into a single fixed interest student consolidation loan and leave fixed interest rate loans aside unless you can get a significantly lower interest rate with the consolidation loan.Watch for prepaying penaltiesSome lenders penalize those who pay off their debt sooner by adding extraordinary fees to the overall debt claiming additional administrative costs. If this is the case, you should leave low balance loans aside. If the fees are not covered by the amount of money you’ll be saving by consolidating the loan you will want to continue paying the loan on its original terms.Keep your credit report cleanTry not to incur in delinquencies as this will be recorded into your credit history and prevent you from getting a good interest rate when applying for a consolidation loan. Before applying, always request your credit report and make sure everything is in order. If you happen to find any inconsistencies, contact the credit agency immediately and demand that they correct the inaccuracies. Many have been denied loans just because a credit agency employee had made a mistake.Avoid Trading Loan Length in exchange of Lower monthly paymentsUnless you really can’t afford the loan installments, refrain from extending the length of the loan. It is best to get lower monthly payments by agreeing to a lower interest rate than to get them by adding to the number of outstanding monthly payments. Extending the loan length may solve your current cash flow problems by reducing your installments, but will increase the overall cost of the student consolidation loan turning it into a bad deal. It is best to cut on your expenses for a little while till your income increases than to consent on many years more of annoying debt.
If you’re the type of person that does not like change then possibly you will want to skim over this posting and move on to the next viable piece of literary expertise. Today we are going to talk a little bit about some of the new and improved debt consolidation options that are around the corner for 2011 and beyond. As most of America knows and a better part of the world in general the accumulation and retention of consumer debt is something that must be addressed as soon as possible.Debt Consolidation LoanThe ability of a debt consolidation loan, in its purest form, is one of the most popular and favorite methods of getting out of debt that exist in the United States and will stay that way well past the 2011 year. Undoubtedly, your e-mail inbox has been slammed full of offers from the companies about getting out of debt with a debt consolidation loan.Great New OptionsOne of the largest benefits of a debt consolidation loans experience is the convenience factor. Think about this for one moment, instead of paying 15 or maybe 20 different credit card issuers a month, who are charging different rates at very different times of the month, why not just take out one larger loan and pay off all of those existing deep in debt accounts? This way you will only have one payment to handle and even though the payment is larger than most payments that you are currently experiencing the bottom line is that the sum of this one payment is below the combined totals of all of your existing loan and credit card payments.New AdventuresBefore you put your John Hancock on any debt loan package, make sure that the cost of the brand-new bundled loan instrument will most definitely be lower than what you would have been paying cumulatively. It makes no sense if you are shelling out a good portion of your bring home pay only to stay at about the same annual percentage rate and balance as your previous loans.Stress ReliefA debt consolidation loan is designed to alleviate both the stress and worry of multiple credit card and other debt payments and bring about a simplification in your life with one nice and neat monthly payment. If you are interested in learning more about a debt relief package and a debt consolidation loan especially for your way past due credit card balance sheets then by all means please do just that and remember there is no time like the present.Debt Consolidation Resources
Dealing with credit card debt is difficult for anyone in this bad economic scenario. Trying to stay afloat is getting more and more slippery so when debt starts to get overwhelming and you just cannot take it anymore there is a way out. Attaining debt consolidation loan is becoming more and more popular for ones who are struggling with debt which at first they thought they could handle; however, before you decide whether you want to pay of credit card debt with a consolidation loan, you should be aware of the consequences, both bad and good.If you make the right choices a debt consolidation loan can be very good for you and if you do not you can end up in a worse position than you were in before. After you have gotten a debt consolidation loan, you will have one cheque to write instead of eight or ten. This way you will have fewer due dates that you have to remember, which will be a huge relief for those who have an issue with late payments, it also means that there is only one late fee if a mistake is made rather that multiple. Now, that you do not have to deal with many different lenders, it will be easier for you to budget for the monthly loan payments. You will be able to come up with a plan to pay off debt without having to think about all the different payment, fees and interest rates, all there is, is that one loan payment a month.We all know that having a lot of debt can cause not only financial burden but mental stress as well. When you decide to consolidate your credit cards, it can make you feel more in control of the situation. If you have also been harassed relentlessly by collection agencies, relief from the calls as well as letters will be like being in heaven. With these positive consequences there are negative ones that you also have to consider. Many think that getting a debt consolidation loan is a green light to run up more bills. Lots of people like to take advantage of that fact. Once their credit cards are all paid off they think it is okay to get into more debt.Then they have the debt consolidation loan and the other bills that you have made. There are tons of lenders who can talk a good game, but when the actual terms of the loans are reviled, they will end up costing you more money than you would have if you would have just kept paying on your various debts. Some lenders will do this by raising the interest rates, adding extra fees and other hidden charges. Often these companies will prey on the ones who are very concerned with taking care of their bills and will take the first offer that they see.
So, you have a large amount of accumulated debt. You don’t know what to do as its taking a toll on your monthly payments as well as financial security. Well, in such cases, a debt consolidation loan might come handy.Consolidating your debt with a loan is one way you can try and get rid of all the trouble you have been having with your credit.What is it?In essence, a debt consolidation loan rolls up all the borrowers existing debt payment into one loan. This enables the borrower to make only one monthly payment for all the debts. In most cases the monthly payment that a person makes on such loan is lower than what the person would make if he made individual payments for each debt.The Objective of the LoanA debt consolidation loan is made to order when it comes to lowering the monthly payments of a borrower. That is the essential purpose of this loan. As the loan is of a larger amount than any of the outstanding debts, you might also find yourself paying a lower amount of interest.This purpose is of paramount importance when it comes to settling credit card debts. The loan that you will take for consolidating your debts and improving your credit situation will have significantly lower interest rates than various other options, in terms of loans, that are available in the market.There are numerous options that you can choose from when it comes to consolidating your debt with a loan.The Bad Credit LoanThere are a few loans that are specially configured for people with a bad credit problem. This type of loan will help save money by offering a lower interest rate, which in turn leads to a large amount of savings in the long run.At the end of the loan period, you are not only free from debt, but also have good credit.The Home Mortgage LoanIf you are home owner, then you can use the equity that you built in your home to take a debt consolidation home mortgage loan. The difference between the market value of your home and the amount you have already borrowed, will determine the amount of loan that you can get.A good thing about this type of loan is that it is a secure loan, and hence one will have to pay a low interest rate on the borrowed amount.The Secured LoanIn such loans, the borrowers need to put up collateral as a security for the loan taken. This could be in the form of property, the value of the car or other items pre-designated by the lender.At times, you are also given an option to borrow a higher amount of loan, as the lender can repossess the collateral in the event you are unable to payback the loan.The Unsecured LoanIf you have no collateral, you can still take a debt consolidation loan, albeit at interest rates far higher than those of a secured loan.This is just a very brief idea of what consolidating your debt is all about. There are various other facets to it that must be considered before you choose this option to live a life free from debt.
When one is looking at ways of understanding the true facts concerning government debt consolidation loan, it is possible to become skeptical or even assume that this loan is just like all others that are provided by private firms. In essence, while there are no direct systems available in the market at present that permit people to get loans directly from the government, there are some programs created to benefit some particular borrowers.With so much financial insecurity surrounding the present economic environment, it is very vital that people become smart about their finances and ensure they save as much as possible. People with a considerable amount of credit card or even student loans are some of the candidates to consider consolidating their financial obligations. This is a great way of developing a financially free future.People should seriously look into such state consolidation programs. Surprisingly, not many people see the need of taking advantage of such options. The advantages of taking such options will automatically result in decreased interest rates, monthly payments and even decrease in the total sum of loans.Instead of going through the conventional lending financial institutions, the state consolidation loans are sponsored through a number of state programs. There are many students who struggle to pay off their loans and there are many programs that can assist them to effectively manage their debts as well as consolidate them all together.What many individuals do not know is that many of the lending financial institutions normally charge a fee for all their services. This is usually not the case with state consolidation grants. Moreover, many private financial establishments will also need some kind of collateral like a home which does not happen with state programs.One should be sure to schedule free consultation to get better objective view of their finances and what one can do to get them on the right track. The best thing about taking this program is that they will be able to negotiate with creditors on one’s behalf so as to consolidate their debt while making all the crucial arrangements.For people who are not students, there are state aid programs available. Many individuals do not realize that the state does not want them to default on their loans as it can have very terrible consequences on the economy on a very wide scale. There are billions of dollars every year that actually go unclaimed.For people who find themselves struggling with financial insecurity, them they owe it to themselves to get more details about state programs. Going through private financial institutions can be a nightmare but luckily, there are no strings attached to many state programs. Most state agencies that are involved in these programs may pay off existing debts and offer the borrower with fresh loans that will most likely include a lower interest rate with much more generous payment plans.The basic idea behind about getting government debt consolidation loan is that the state will want borrowers to become responsible participants in all financial systems. By giving them a chance to make a lower monthly payment, the idea is that the borrower can learn how to handle their debt efficiently.