How to Find the Right Low-Interest Debt Consolidation Loan
Excessive credit card debt can lead to difficulty paying monthly bills on time. A debt consolidation loan can help lower your monthly credit card payments by combining the high interest credit card debt into a single loan.
Some counselors or “debt management services” will promise you whatever they think might get you to sign up so beware as they might charge interest rates that are even higher than you are already paying in addition to charging a fee for their service.
A debt management service can negotiate with each creditor on an individual basis for lower interest rates and to stop credit card fees from accruing. When a settlement has been reached, the interest rate will be a fixed rate. Provided the creditor is paid on time this rate will not increase. In the event of default resulting from late payment the creditor retains the right to resume collection proceedings.
The application process for debt consolidation loan services requires all monthly bills and income statements (And that means all of them). The amount of time for processing will depend on the method of application.
Some applications may be completed on a company website, while other companies handle the application process over the phone. It is vitally important to ensure the company has a good reputation before revealing any of your personal information. Reviews of these programs and companies are available online and by contacting the Better Business Bureau or Chamber of Commerce in the city where the company operates. The reviews will help in the selection of the right company to handle the debts.
Some companies may claim there are “no restrictions” on the loan being offered. Be sure to read the fine print before making a final decision. Some companies may also allow you to borrow more than the debt amount owed - often considerably more than is owed. The additional funds are then combined with the debt amount for the total loan amount.
A word of caution if you choose to consider such an option: You are already in debt up to you eyeballs, and now you’re exacerbating an already bad situation. Don’t let the loan consolidation counselor talk you into something you don’t need. If you don’t need the extra money - really need it - then turn it down. You’ll thank me for that advice later, I assure you.
Most reputable companies will have more than one plan to choose from, and by working with a loan consolidation counselor one on one and discussing your situation openly and honestly, you will no doubt find the right options for you. Don’t ever forget that until you agree to their terms and commit to them, they are salespeople trying to win your business.
Last 5 posts by Martin Tan
- Is an Unsecured Consolidation Loan Right for You? - April 29th, 2008
- What Can A Credit Card Counseling Company Do? - April 17th, 2008
- Is a Sallie Mae College Loan Consolidation for you? - April 10th, 2008
- Make Your Credit Card Debt Affordable - April 3rd, 2008
- Student Loan Consolidation: Lowering the Cost of Education - March 9th, 2008
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