Debt consolidation is when the borrower merges several small loans into one. Consolidating or merging small high interest loans into one allows the borrower to get a better interest rate with your lender. When you consolidate your debts, you are taking a new bigger loan to repay the smaller existing loans. Instead of having several creditors chasing you to repay their loans, your lender will clear all your loans leaving you with only one loan. In essence, the monthly repayment period is extended and the interest rates are reduced as well. Unlike debt settlement, here you are not reducing the principal amount that you owe your creditor but you are merging several small loans into one to help you concentrate on one loan.
When finding the best debt consolidation loans, it is essential that you understand all aspects about the loan. When you combine multiple debts into a single loan, you reduce the risk of forgetting or defaulting a loan. There are two main reasons why people choose to consolidate their loans these include
Reduce interest rates applied to the debt
Lower monthly payments to make debt management easier
What types of debt can I consolidate?
The most common types of debt is unsecured debt include store credit cards, credit cards, fat cards, among others. In some cases, you can consolidate unpaid medical bills with your unsecured debts. It is important to evaluate your financial position and the amount of interest that you are being charged when compared to the overall amount of loan that you are paying. Consolidating debts allows the borrower to have peace of mind and focus on one loan instead of tracking numerous loans that may end up affecting his credit history. You can consolidate all your small loans to allow you to make a sound financial decision and reduce the chances of regular contact from your lender.
Types of debt consolidation loans
There are different debt consolidation loans and you should conduct thorough research. Most people fall into a debt cycle because they do not do their research properly. Analyze and evaluate the terms and conditions of the loan that you are given by your lenders. This way you will get the best interest rate and pay less interest. The common types of consolidation loans include
This is a type of loan that is tied to some kind of collateral, mainly assets that the lender will sell to recover the amount borrowed if the borrower defaults the loan. Many people assume that it is easier to get a secured loan because a property or an asset is in place. However, many Americans cannot get the secured loans because they are often tied to bad credit scores. Credit score is a measure of credit worthiness. It is a figure that calculates your ability to repay a loan considering your assets, liabilities, expenses and income. Qualifying for this type of loan is complex because you have to present papers and other supporting documents.
Unsecured loans are not tied to any assets and in situation where the borrower is unable to repay the loan, property is not confiscated. Many lenders whom we will connect you to offer unsecured type of loan, therefore you should not worry about your less than stellar credit history. Your lender will evaluate the amount and consider all the expenses and other features of the loans that could affect the mode of repayment. You can negotiate with your lender on the type of loan that you want to take before you opt for this type of loan. Debt consolidation through unsecured loan is better because you will not have to repay high interest rates on small loans.
Where Do I Get Debt Consolidation Loans?
If you need unsecured debt consolidation loan, it is imperative that you conduct thorough research that will help you make a better financial decision. Most borrowers are limited to the brick and mortar lending institutions, which often affects their ability to get affordable loans. We connect borrowers to lenders who will fund your loans. We have a user-friendly and easy to fill out loan request forms. Once you have filled out the loan request form and submit it to us, we will forward it to lenders in our network who will finance the loan. Our customer support team is experienced, courteous and is ready to serve you. They will guide you through the loan request process and answer any queries you may have about the debt consolidation loan. You can check the frequently asked questions page to understand how we operate and how to apply for the debt consolidation loan from us.
Is Debt Consolidation Right Option for You
This question varies from one borrower to another. However, it is important that you understand your state laws and regulation on payday loans and debt consolidation loans. Different states have different interest and caps on the amount of interest that a user can get.
Advantages of Debt Consolidation Loans
You can manage your debt
Debt consolidation loans can help you overcome debts. When you consolidate your loans and manage the repayment process well, you will be in a position to make financial decisions that will get you out of debt. Consolidation your small debts will allow you to reduce the interest rates that are often associated with small loans.
Reduced interest rates
When you consolidate all your outstanding loans into one loan, your lender will negotiate for a better loan interest rate that will help you overcome high-interest rates that are common with small loans. There are several reasons why creditors will accept repayment at a lower rate. The common reason is that they want their money back even if it is with less profit. Your lender will convince your creditor that your loan will be repaid within the stipulated time and you can work towards the repayment process.
Affordable monthly payments
Many states have legal limits when it comes to loans. You should understand the interest rate and caps in your state to know what you are into. Even if the state does not have legal provisions, your lender will work towards a better monthly payment to allow you repay the loan without affecting your regular lifestyle.
Single monthly payment
There is nothing more liberating than having to pay only one installment a month. When you consolidate your loans, you will be in a position to plan for a solid financial future. A single payment means that you have reduced the burden of following up with several small loans and you are repaying one loan.
No collection calls and emails
Once you have consolidate all your debt, you will be dealing with one lender, therefore avoid harassment from creditor who will make regular effort to collect their loans.