Posts Tagged ‘consolidation loans’

The Three Big Mistakes of Getting a Debt Reduction Loan (and How Not to Make These Mistakes)

November 4th, 2018 Comments off

If you’re in debt up to your eyeballs, you’re probably on the telemarketers’ list. They call, offering to give you a debt reduction loan. At first, this kind of loan sounds like a dream come true. After all, why wouldn’t you want to lump all your smaller debts into one easy-to-pay loan with a low interest rate?

Any wise man will tell you that you can’t get something for nothing. This is absolutely true when it comes to debt consolidation loans. Although they look good, these loans can be full of traps to snare the unsuspecting person, getting you in more trouble than you already were in. Here are the worst of the traps of getting a debt reduction loan:

Trap #1: You’re treating the symptom, not curing the problem.

The worst aspect of debt reduction loans is that they don’t fix the problems that caused you to be in debt. Instead, they treat the “symptom” of having debt. When you get one of these loans, you just end up with a large loan that you have to make payments on…but you will also acquire new debts when you eventually start to, once again, spend more money than you have.

Any statistician can tell you that the likelihood is high that someone who gets a consolidation loan will wind up with the same amount of debt, or more, in two years or less. And remember, they’re still making payments on their new debt consolidation loan.

Trap #2: Making your unsecured debts into secured debts.

If you have credit card debt, you should know that it is what is called “unsecured debt”. This means that the loan is not backed up by a tangible object, such as your home. Most consolidation loans are what is known as “secured debt”, or debt that is backed up by something valuable, most often the house that you live in.

The main problem with this is that when you can’t pay off your loan (and this is not uncommon), the creditor has the ability to foreclose on your home. On the original debt, the only thing the creditor could do was sue you in a court of law. They couldn’t take your home from you.

What you’ve done to yourself by taking out a secured loan (also known as a “home equity loan”) is to make your home vulnerable to foreclosure. Not too smart of you, was it?

Trap #3: Higher interest rates, not lower.

Even if you dodge the bullet of getting a secured loan by getting an unsecured loan, you’re still gonna get smacked with higher interest rates. This is because your inability to pay off your current debts makes you a credit risk, meaning that anyone who is willing to give you credit is going to charge you a higher interest rate to offset the additional risk.

They may change the loan in different ways, including a longer loan term, in order to offer you lower monthly payments than you’re making right now. However, this means that you will still pay more in the long run for your debts. As somebody who is already in debt, you probably can’t afford to do this.

So, how do you avoid these traps?

You can steer clear of all of these traps by deciding to manage your own debt. Unless you’re already filing bankruptcy, you still have the capability of getting out of debt without resorting to the help of some new lender or a so-called credit counselor. You’ll have to make some drastic changes to your lifestyle, but after you change your lifestyle, you’ll be well on your way to changing the behaviors that got you into debt in the first place.

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Lenders Like To See Two Years Of W-2 Income

January 20th, 2015 Comments off

Credit for todays consumer is in turn dependent on the reputation or credit worthiness of the entity which takes responsibility for the funds. Credit is also traded in financial markets. Credit is available, but demand remains flat. Asked in the July survey how demand for commercial and industrial loans has changed over the past three months, 61% of banks responded “about the same,” while 9% said “moderately weaker.” While it was good news that 30% responded “moderately stronger,” it’s not exactly a surge in demand.

Credit for todays consumer is borrowed money that you can use to purchase things you need when you need them and then repay the funds back at an agreed on time. Services can also be paid for on credit such as cable and telephone services.

Loan recipients also receive business training to maximize the potential for success. Loan consolidation is available for your private student loans. Lenders do not want to see you default on your student loans.

Loans for bad credit are carved out for the especial purpose of providing financial assistance to the people with bad credit record and low credit rating. While such people do not find approval elsewhere, these loans are considered for the borrowers since the lenders are willing to relax terms-conditions.

Lenders must take responsibility not just for originating loans, but also for the loans performance. Lenders like to see two years of W-2 income. This proves to them that you consistently make enough money to pay back the loan.

Lenders are always continuing to lend at high rates, and the economy continues to operate reasonably well. If people panic and allow Congress to exploit the hyped-up fears of the moment, however, much worse outcomes may be brought about, not the least of which is another giant leap in the size, scope, and power of the federal government, a direct threat to our economy and our liberties.

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Bad Credit Loans Through Secure Lending Benefit Both Parties

January 11th, 2015 Comments off

Credit loans which are bad are those used for paying off mortgages that have interest rates that are just too high and want to refinance. They can be used for home equity loans, personal loans, payday loans, and even home improvement loans.

Bad or Poor Credit Loans were set up to help with short term cash flow problems. As these loans are only meant to be used in emergencies and for a short time, they should be avoided if you have serious long term money problems as they are unlikely to help. Bad credit loans are readily available for those borrowers who need to take advantage of them. Not everyone is capable of staying out of financial difficulty.

Credit loans which are bad are the fast and best way to grab the funds easily and on time. These loans are the best financial option for those who do not want to risk their assets and property. Credit loans which are bad are possible with the online quick money suppliers because the normal credit reporting services are not contacted on this type of personal loan. Since the amount of the loan is small, the payday lenders will often only check the other cash advance history of the borrower to determine if they are safe to loan more money to or not.

Bad credit in the past may not exclude you from receiving fast approval for a bad credit personal loan. Sometimes just a little emergency money from a company that offers personal loans with bad credit is all you need to get to your next payday.

Credit loans which are bad are also no problem. Bad credit car loans suitable for all types of people, including those who are busy or already paid. Most applications for online auto loans are the easiest way to obtain credits simply! Credit loans which are bad through secure lending benefit both the lender and the consumer. It helps reduce the credit risk associated with lending money to a person with poor credit; because the collateral is in place the lender can rest assured that in the worst case scenario they will still recoup their money.

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Everything You Need To Understand About Debt Consolidation

November 4th, 2014 Comments off

The concept of debt consolidation is to take all the debt that you currently have and make it into one debt. The point of this is to enable you to secure a lower interest rate and to have one repayment only. The purpose is also to reduce your periodic repayment amount.

Generally, an individual would want to consolidate credit and charge card debt. Credit card charges normally carry high interest rates. If you handle the repayment schedule of a consolidation loan effectively, it will be advantageous to get one.

There are two choices that you should consider if you own a home. You can get an equity loan on your home and use the funds to pay off your debts. As equity loans generally attract a low interest charge, your repayments will become less than what you are paying on all your current debt.

The other option, if you own a home, is to refinance your home. One of the advantages to applying the home loan strategy is that you will have one loan to pay and the repayment will become less. This is because the loan will be spread over an extended term and the interest charge will be lower.

You could apply for a personal loan. If your credit score is good, you should be able to acquire an unsecured loan. Private lenders will generally offer you a better interest rate than the banks will. There is the option to refinance your vehicle, if you own one. This is not a good choice though as the short life span of a vehicle does not make it viable.

You could also negotiate new terms with your lenders. Contact them to discuss a better interest rate on your debt. If you apply for a lower interest charge loan, your periodic payments will lessen. Rather than spend the saving you gain on the repayment, you should pay it into the loan. This will enable you to save on the final interest amount and it will also shorten the loan repayment period.

Using bad debt consolidation loans as a way to control and manage your sizable obligations will help you to reduce the financial pain. A bad debt consolidation program can help you get a handle on your spending habits.