What Is a Low-Interest Debt Consolidation Loan?
For those with bad credit and on the edge of bankruptcy, considering a debt consolidation loan could be an excellent way to help save or improve your credit ratings as well as offer your some peace of mind.
Some Increase Unavoidable
Indeed, your debt consolidation scheme might cause the amount you owe to go up a few hundred dollars. This is for all the administration, arrangement, and cancellation charges and fees that will accrue. And, because of those and your reduced payments, the term of the loan will more than likely be longer.
Benefits Accrue Too
At any rate, it is far preferable to begin fresh, knowing that your payments are affordable rather than to fear that day when you might not be able to meet your financial obligations. Making just one payment is far easier than making many and should worse become worst, it is definitely more easy to renegotiate a single loan than it is to deal with multiple loans.
Collateral Is a Consideration
Should you seek a loan with better rates and terms, such as lower interest rates, you may be asked to present collateral of real value, such as property. This may require you to use your house as security. Of course, should you default on the debt, the lender would be obliged to secure the property and you would be faced with the prospect of homelessness. Many would not want to risk this, so if you have other high-quality property or possessions that you feel better about risking, you should offer that.
Shopping Around Is Necessary
Of course you are going to have to pay interest as well as the principle in each payment. So you should shop around for the best interest rates and the most favorable repayment terms. Avoid those lenders who talk too loudly, too quickly, and ask too many questions too suddenly. Have a good understanding of what is available on the market so that you do not get drawn in by the first huckster that comes along.
Interest Rates Will Be Higher
During your negotiations, you will discover that interest rates tend to be somewhat higher than regular loans. Taking a debt consolidation loan, especially if you have poor credit, is somewhat of a risk to the lender and they charge a higher interest rate to cover that risk. You have a poor credit history and are seeking a debt consolidation loan, both are indicators of poor risk. Lenders are readily available on line, but you may want to start with local banks at the outset.
If none of your local lenders are willing to give you a debt consolidation loan, ask for suggestions from friends or family members who you can trust. Barring that, avail yourself of the resources available with your Better Business Bureau. They have directories of companies willing to lend the money for debt consolidation, and these directories also rate the various companies as to how they have performed for others in the past. Be persistent. A debt consolidation loan can give you peace of mind while allowing you an opportunity to improve your credit rating.
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ABOUT THE AUTHOR
Lara Sawyer is the author of this article. She works successfully as a financial advisor with years of expertise on Guaranteed Bad Credit Loans. She publishes informative articles about Money Lenders for Bad Credit, home loans, credit cards, auto loans, business loans and others at http://www.fastguaranteedloans.com