If you have never considered a personal debt consolidation loan, maybe
nows the time. Each year, millions of people file bankruptcy as a
means of eliminating their consumer debts. Although bankruptcy may seem
like an easy fix to credit problems, the effects are long-term. Before
taking drastic measures, explore other debt reduction options.
Understanding Debt Consolidation Loans
Debt consolidation loans are intended to help people manage their
credit, and pay off debts sooner. Without consolidating debts, some people
are able to reduce their debts. However, this long process takes several
years. Instead of paying on a high interest credit card for ten or
twenty years, it may be more beneficial to consolidate debts. This way, the
balance in paid within a few years
Convenient and Lower Monthly Payments
The convenience of a debt consolidation loan is an attractive feature.
If you are burden with several creditors, making payments to various
lenders may be time consuming and frustrating. Furthermore, having too
many creditors makes it easier to forget a payment.
Through debt consolidation, all your credit balances are combined into
one loan. This alleviates submitting several payments each month.
Rather, you make one payment to the debt consolidation lender.
Debt Consolidation lowers monthly debt payments by reducing interest
rates. For example, if you have four high interest credit cards, minimum
monthly payments for all four credit accounts may be around $200.
However, if you consolidate the four balances and obtain an interest rate of
9 or 10 percent, monthly payments may be reduced up to 50 percent.
More Money Goes to Reducing the Principle
Many people are unable to reduce their credit card balances due to high
interest rates. In some instances, the minimum payment is lower than
the finance fees. Thus, the balance continually increases, even if you
are not using the credit card.
By obtaining a lower interest rate, a large portion of your monthly
payment is applied to the principle balance. If possible, attempt to
secure a debt consolidation loan with an introductory zero percent interest
rate.
Restores Credit Rating
Try using one of ABC Loan Guide's Recommended Debt Consolidation Companies Online.
If your credit score was suffering because of late payments or a
exceeding credit limit, a debt consolidation may quickly improve credit
score. A better credit rating will make you eligible for lower rates on home
loans, auto loans, etc.
View our recommended sources for Bad Credit Debt Consolidation. Also, view our recommended sources to Check Your Credit Report For Free.
