Debt consolidation loans offer a possible solution that can help you to deal with overwhelming forces of debt coming from multiple directions.
When you have debt from several lenders or lines of credit, each with their own terms and interest rates, it can be difficult to keep up with repayments. It’s at times like this that people turn to debt consolidation as a way to improve their situation, but can it really help, and is it easy to find a lender?
When Can Debt Consolidation Help?
Before you consider finding a consolidation loan, you need to consider whether it will actually benefit you. Consolidation loans are useful for people who are struggling to make repayments to several creditors. A loan is taken out for an amount that covers the other debt, and you are left with a single loan with one set of terms for repayment.
This is good for debt management, making it easier to get on top of payments, but to really benefit you need to make sure the terms and interest rates are lower on your new loan. A worthy consolidation loan saves you money in the long term, and the money saved can be used to pay off debt quicker.
Is It Easy To Get A Consolidation Loan?
Your ability to secure a consolidation loan will depend on your individual circumstances and credit rating. If you have a home, you could consider a secured home equity loan or line of credit as a way of consolidating debt but, in many cases, it is more sensible or appropriate to apply for a personal consolidation loan.
As with most credit, your lenders will examine your rating and make a decision based on the perceived and statistical risk that you represent. A lower credit score may result in lower interest rates or, in extreme cases, lenders may decline your application.
It helps to pay off your debt and improve your credit rating as much as you can to secure a better deal on your consolidation loan. Either way, in most cases it will be possible to find a lender.
Understanding The Costs – Is It Worth It?
If you are going to get a consolidation loan, the savings should outweigh the costs. Makes sense, right?
It’s important to speak to several lenders to see what they can offer, and to compare loan costs, terms and interest rates. Make sure to look out for additional costs such as application fees, valuation fees, legal fees, and stamp duties.
There will also be costs associated with refinancing your existing debt. Lenders make money off interest rates, and have a vested interest in keeping you in their palm, so many credit cards and loans have early payout fees designed to compensate for consolidation.
You need to weigh all of these costs up against the savings that you will make from lower interest rates and reduced late payment fees that your consolidation loan can grant.
Once you do secure a consolidation loan, it is important to shut down old lines of credit to avoid the temptation of spending, change habits that perpetuated debt in the first place, and work hard to pay off the loan quickly. Consolidation loans should be used as a platform to get out of debt.
Consult Debt Specialists
Securing a debt consolidation loan is reasonably easy, but finding the best lender and making sure that your loan actually saves you money is challenging. Debt specialists can search for the best lenders who offer the lowest interest rates for your situation, as well as orchestrating financial planning that can lead to a life free from debt.
Contact Debt Negotiators today to arrange a consultation. We can secure the best value consolidation loans from trusted lenders.