Debt consolidation is a strategy used to simplify your debt situation by combining multiple debts into one loan.
It is possible to get a debt consolidation loan with bad credit, but there are some steps you need to take to be successful. To get the best help when applying for a debt consolidation loan, you need to do your research well. Do your due diligence with lenders and be honest about your financial situation.
Start by finding the best debt consolidation loan company to partner with. To start exploring the options, it is advisable to use a free service company like Sfgate for advice. Here you will get help through the process of refining your choices. To get it right, compare the interest rates, fees, and terms of various companies.
Getting started with debt consolidation
If you are someone drowning in debt, you are probably looking for a way out. If this is the case, then getting a debt consolidation loan could be the solution. The advantage of this type of loan is that it will consolidate all your debts into one manageable monthly payment. Here are 5 steps to getting a debt consolidation loan in 5 steps.
- Make a list of your debts
The first thing you need to do is make a list of all of your debt, from credit cards to student loans and everything in between. This list will become important later when you start calling creditors or financial institutions to negotiate the down payments or interest rates on your new loan.
- Decide whether or not it makes sense to consolidate
Consolidation can be a great option to deal with accumulated debts. However, there are times when it just doesn’t make financial sense. For example, if you have credit cards with high balances and lower interest rates than the loan you get, consolidation may not help your situation much.
If you can’t make the minimum payments on your credit cards now, you still won’t be able to make the minimum payments after consolidation. Hence, it means that you could end up with more debt than before the consolidation.
- Find out what your current interest rates are
If you already know this information, go directly to the next step; if not, here’s how to find out from each credit card issuer:
- Call the number on the back of your credit cards and ask a representative to give you your interest rates. Some people don’t like talking to collection representatives. However, remember that it is YOUR money that we are talking about. Therefore, call and get these rates!
- Visit the billing statements section of your online credit card account and get the current interest rates listed there.
- Find out if you can find a debt consolidation loan at a lower rate
The lowest reported rates come from the Lending Club, which offers debt consolidation loans between 3.49% and 7.07%. It might not be wise to consolidate all of your debt at once, but it’s probably a good idea to consolidate what you can.
- Check with your local bank for more information on their loan programs
Get help from local banks on available loan programs. Also try smaller banks which are not open to public investors, as they are often able to offer better rates than larger banks.
Getting the best rates on your debt consolidation loan is possible by using all the tools at your disposal. By making sure that you can find a better rate than what you are paying now, and then consolidating all that high interest debt into one low payment, it will be much easier to pay off in full.
You can save a lot of money by consolidating your debts. However, you need to choose the right debt consolidation company to use. The wrong choice could cost you thousands of dollars, so be sure to read any offers carefully before signing on the dotted line. It is important to avoid falling into another trap with another lucrative ploy. If you need more advice on how to consolidate your debt, be sure to contact one of our friendly advisors today.