Debt Consolidation Loans? – How Does It Help You? What Does It Do?
September 7th, 2010 | 
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What is a debt consolidation loan? A simple answer would be a loan that allows you to re-route all your existing debts through a single source, with a lower interest rate. The loans may be secured or unsecured loans.
There are many benefits of obtaining a debt consolidation loan. The most important one being that it is easier and less cumbersome to repay a single consolidated debt. The rate of interest for a debt consolidation loan is more reasonable as compared to the interest rates applied for each of the debts, separately. A debt consolidation loan can be repaid within a short period as its tenure is fixed. Repayment of each installment reduces the principal amount of the loan.
A debt consolidation loan does not permanently mar the individual’s credit rating like other methods of credit repair. This loan will afford you the breathing space required for financial planning and the stability that goes with it. The creditors are assured of the repayment of loan, even though it may be at a lowered rate of interest.
Individuals with a bad credit rating can also obtain debt consolidation loans. A debt consolidation agency will help an individual with a bad credit score to improve the credit rating by devising a financial plan to suit his needs. Thus, debt consolidation loans help the individual to be on the right track towards financial health.
However, there are a few disadvantages of opting for debt consolidation loans. Although a debt consolidation loan decreases the rate of interest, there may be an increase in tenure. Ultimately, the borrower will end up paying more in terms of interest on that loan. It is prudent to select a reasonable tenure of repayment for the loan taking into account the expense involved.
Debt consolidation loans are very often secured on the assets of the individual. A default in repayment of the loan may result in the forfeiture of these assets or property.
The first step is to ascertain the amount of loan that is required to consolidate all the debt. The best way to get a good deal in terms of a debt consolidation loan is to research a few companies and find out their terms and conditions. Select a company that is reputed and well known and is offering good rates of interest. This will help in reducing your financial worries to some extent.
Watch the video related to debt consolidation
Explains debt consolidation services and credit card debt elimination programs to get on track and out of bad financial situations. www.cleardebtresults.com debt consolidation services, debt-consolidation-services, credit card debt elimination, credit-card-debt-elimination
Help answer the question about debt consolidation
What do you think about debt consolidation?I heard going through one of those debt consolidation companies is just as bad as declaring bankruptcy. Is that true? If not which one is the best to deal with?
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"Unfortunately like most people now a days I ran into some financial trouble"
is not true. There are a far larger number of people who still continue to pay their bills on time each and every month.
Now what you might try is to go to CCS, a credit counseling service who try and help you negotiate down interest rates and payment amounts. ONLY CCCS, consumer credit counselor service, look in the local phone book. There is a down side because it may be on your credit reports that you are on the program but reflect you paid all your creditors when paid off.
If you are being badgered and you will NOT get a loan without collateral or a cosigner this is something to consider. Go have an interview with one of their counselors and see if they can help you and know what they are saying before signing on the dotted lines.
$9,000 is not a big deal at all.
If any are seriously past due, you can call them and make an offer for much less than she owes. Just make sure to get the agreement in writing, then mail a money order (not a check) along with a copy of the letter. Keep the original letter and copy of the money order FOREVER.
For the rest, make all the minimum payments every month. Take EVER EXTRA DOLLAR you have and put it to the lowest balance. Once that is paid off (which should be quickly), start applying that amount to the next one. Continue the debt snowball until you are out of debt.
To do this you have to cut out ALL unneeded expenses. Don't eat out, don't buy new clothes, get rid of the cable, get rid of the cell phone, etc..
If needed, get an extra part-time job (or two).
Just buckle down and pay it off. IF you booth work hhard at it you could easily pay it off in less than a year.
In the meantime PAY ONLY CASH OR DEBIT for everything.
DON'T CONSOLIDATE. Rolling everything into one payment does NOTHING to get you out of debt, and it frees up all those credit cards so she can charge up more junk. Your problem is not having to write a bunch of checks each month so consolidation won't help.
EXSOL's answer is so full of nonsense I don't know where to begin. Best to ignore it and start over…..
You have two issues. What to do about your debts, and how to fix your credit.
For paying the debt, start by seeing what sort of deal you can work out on the medical bills. Tell them your situation and see if they will work out a payment plan with you over a few years. They usually are more flexable with medical bills, as long as you make your payments and don't play games with them.
Then, with whatever you have left, negotiate with the other creditors and try to get the balance lowered, or if they will again offer a payment plan.
It's VERY important that you demand they REMOVE any negative information from your credit report. This does NOT mean to put "paid" on your account. It will still show negative information and late payments. This will still ruin your credit if it's left there. If they will not promise IN WRITING to do this, do not pay the bill. Concentrate your efforts on those creditors who are willing to help you.
As for credit repair….you don't need a lawyer. You don't need a credit repair agency. These people do exactly the same things that you can do. I've supplied a link below that goes into it a little bit.
Regardless of who does it, there is no guarantee that any credit item will be removed form your report. There are only two ways it can be done.
Either the creditor removes the item or they fail to respond to a dispute investigation from the credit bureau. If the creditor follows the procedure, there is absolutely no way to remove a negative item, and it will stay on your report for 7 years.
See http://www.debtreliefprogram.esuperfind.com?id=ntth if possible they'll pay off your debt and you'll pay them off at a lower interest rate.
They don't service all areas but their forms are mega quick.
Your best bet is to do it yourself without the fees that a debt management program charges.
-Come up with a budget that frees up more cash to pay more than the minimum on your highest rate card.
-Find ways to save money each month to put towards that debt (use coupons, eat out less, less driving to save gas, etc).
-Find ways to be more frugal (spend less on gifts, make meal plans that use common ingredients, have a garage sale, spend less on new clothes)
-Call each of the credit cards and ask for a lower rate (it may work, you never know).
-Improve you FICO scores to get better rates by limiting credit inquiries, paying bills on time, lower utilization ratios, etc.
-You will be surprised how the balances start moving downwards if you are diligent and work hard to put extra cash towards the debt.
-When you get extra cash use it to pay off debt (tax rebate, tax refunds, bonuses, gifts, etc.)
-Once you pay off that highest rate card, put that monthly amount to the next card and watch the balances and interest paid drop (called the snowball effect).
Oh and good luck! Lots of people have been where you are and come out the other side debt-free and happy!!! Just keep working hard.
You asked for advice, so here it goes. I will tell you about the plan my wife and I are on later.
FIRST, Do not do debt "CON"-solidation. These people are mostly scum. They will charge you money to do what is already in your power to do and you will probably not be any better off. Debt as they really don't care about the timing of your bills being paid, they care about themselves being paid. It will also go on your credit report as a black mark. If you are current on all your bills, the creditors will not make a deal with you. They have nothing to gain by this. If you are way behind and have not sent them money for a long time, they think they will not get their money and be more likely to settle with you. Enough on these sharks.
Next, Debt consolidation loans are a tricky thing as well. If you take out a new loan to pay off old debt, you are not paying anything off, you are just moving the debt to a new place. I know this because we fell into this same trap. We felt like we were doing something. In fact, we weren't. We took out a loan, paid off all of our debts and did not change our spending habits. Now we have the consolidation loan payment and the credit card bills. Now we pay 2 payments instead of 1. Real smart eh?
You must change your spending habits to be able to pay down debt.
You do make a fair amount of money and I am happy for you. Now you need a plan to make that money work for you.
I know this will sound like a commercial, but read on. This plan has changed our financial lives.
The plan my wife and I got on is from a guy by the name of Dave Ramsey. I started watching this weird guy on Fox Business Channel talking about living on cash and tearing up credit cards and doing smart things with your money. After a couple of weeks, my wife and I looked at each other and the light bulb went on. This weird guy makes a hell of a lot of sense. I went out and bought his book, The Total Money Makeover, the next day. I read it in 1 day and felt like I had been hit in the face really hard. My wife read it and she felt the same way. There are many myths and truths about money and we were living the myths. This program is awesome. We started in November last year. We have paid off both cars ($800/month) and had a cash only holiday season. Both cars were paid off almost a year early. We now take that $800 and apply it to our other debts along with every other dime we can find. The short version of his program is:
1. $1000 in emergency savings saved
2. Pay off debt using his debt snowball method (see book for details)
3. Fully funded emergency fund of 3 to 6 months living expenses. You already said you do a budget and this number should be easy to figure out.
4. 15% invested in retirement savings.
5. College savings for kids
6. Pay off house
7. Super saving and investing.
The key to this program is to say no to yourself and others. Pay off debt, smallest to largest, regardless of the interest. See book for psychological reasons why. You are already on a budget so that is good. That is also the key. You can not spend any other money than what is on your budget.
Our spending habits have changed dramatically. Once you see everything on paper and get mad at your debt, you will be surprised at how easy it is to say no. We do not go to the bar, out to restaurants, vacations, or anything else until our debt is gone. We are having a huge garage sale and the proceeds will go directly to the debt.
Sorry about the length. This is just so cool to be working through this instead of dreading paying bills, I sometimes get a little over rambunctious. We no longer have that sick feeling in our gut when we do bills. We have a plan and are sticking to it. Nothing great was ever built without a plan.
Please do yourself a favor and pick up his book. It will make you realize a ton of dumb things you have been doing with your money. I know it has really opened our eyes. We have no more credit cards and are using cash and debit for everything. If we don't have the cash, we don't buy it. We save for it. That simple. We have sworn off debt.
You can check out his website @ http://www.daveramsey.com. He has a great video introduction to his program. It is under the Financial Peace University tab on the left of his home page. It is about 24 minutes long and really worth a listen. Is it the best program or the most efficient program in the universe? Who knows? It has given us hope and we are making tremendous progress.
I wish you all the best in getting out of debt. Good Luck
P.S. Sorry about the length but you asked.
Bad credit debt consolidation loans are quite popular with those with poor credit history. If your loan application is rejected by a lender, bad credit debt consolidation loans are there to help. If you want to repair your credit history by repaying a loan, which has simple terms and low monthly installments, again bad credit debt consolidation loans are for you. They save you after rejection and help you regain your financial credibility, so that you can again enter the mainstream credit market.
Bad credit debt consolidation loans are of two types:
1. Secured bad credit debt consolidation loans:
These types of bad credit debt consolidation loans are secured by a collateral usually some property or a guarantor. Since, the lenders find something to bank upon in case you default on payments, the interest rates on secured bad credit debt consolidation loans are cheaper, the lending amounts are higher and the repayment period can be long.
2. Unsecured bad credit debt consolidation loans:
Persons who do not have anything to offer as the collateral or security, can take unsecured bad credit debt consolidation loans. The lenders find themselves at increasing level of risk while giving such loans. The existing bad credit situation and lack of a collateral, make them charge high interest rates and offer low loan amounts to offset the risk involved. But, a person who has a bad credit and cannot provide a collateral has little choice, but to take these high interest loans. At least by repaying these the borrower can rebuild his credit history. Read more from: http://www.credit-card-gallery.com/article/198,Get_over_bad_credit_problems_with_bad_credit_debt_consolidation_loans
You sit down at the end of each month and WRITE a budget for the next month. List your income for the month at the top of the page. Then list what you will do with EVERY PENNY down the page. Note: saving is an item on the list. You deal with car repairs, etc by setting aside money BEFORE you need it. This is why EVERY financial expert recommends having 3 to 6 months (or more) worth of expenses in an 'emergency fund'. Then when the INEVITABLE emergency happens, you have the money to make it go away.
Note: I only read about 2 words of your question details. Nothing in them changes the answer.