What do you know already about loan consolidation? You might be in a situation where you are in over your head with debt for a variety of reasons, and you feel unable to gain control. Now is the time to finally put a stop to this problem and look towards companies that can help you, such as one that specializes in debt consolidation. The information that follows will help you figure out what your next steps should be.
Have a clear payoff goal in mind. Rushing to get the lowest interest rate is not the best and only way to pay off your debts quickly. Consider how you can pay off your monthly debts in approximately 3 to 5 years. This helps you get out of debt and raises your credit score.
One sign that a debt consolidation company is reputable is whether or not they are a member of an organization, like the National Foundation for Credit Counseling. Even if the company verbally confirms to you that they are a member, make sure you still research it to make sure what they are saying is true. A member of an organization like the NFCC has to follow certain rules, like only employing certified credit counselors.
Look for a debt consolidation loan that offers a low rate that is fixed. Using anything else may make you guess your monthly payments, which is hard to work with. Choose a loan which has favorable terms, a great rate and the ability to pay off your debts in full.
Figure out how your interest rate will be formulated for your debt consolidation. It is always best to choose an interest rate that is fixed. You will know precisely what the cost of the loan will be. Be aware of any sliding interest scales. Frequently, you end up making more interest payments than what you had originally expected.
See if the folks who work at the debt consolidation company hold counselor certifications. You can find certified counselors and companies at the NFCC. That way, you can be more secure that you are doing the right thing and dealing with the right people.
Once you decide that debt consolidation is right for you, it could be tempting to take the first opportunity offered to you. Do not take the easy way out. Take the time to research the different places and use the company that will give you the best rate possible when consolidating your debt.
Be sure your first talk with a credit counselor or debt consolidation agent happens for free. They should be able to do a preliminary analysis of who you owe, how the company can help you, and what options are available. If you cannot get a simple introductory session, look elsewhere.
Pay attention to both privacy and security practices when choosing a debt consolidation company. Read over the terms and conditions as well. If there is something you’re not comfortable with, ask questions, and move on if need be to find a better company for your needs. There is no reason to settle.
When consolidating together all of your debts, try to negotiate discounts by paying off your debts in lump sums. In many circumstances creditors will be willing to accept lump sum payments of up to 60 percent off of the money you owe. With the defaults in place, creditors are happy to get something rather than nothing at all.
Try to settle your lowest debts first. Many creditors will offer a lump sum settlement amount. By paying off small debts using a lump sum settlement, you can save as much as 30 percent on each bill. By paying your lowest debts off first, you can use the excess money to pay toward your larger debts.
Do high interest rates have you in a panic? If your interest rates are quite high, you will likely pay a tremendous amount in interest by the time your original debt is paid off. Debt consolidation can be one means to lowering your interest rate, so see if this might be a good option for you.
Now that you’ve gone over everything you needed to know, you can tell if you need to use the advice or not. It’s important to make this decision carefully. Prepare yourself to conquer debts. No longer should you be a slave to that mountain of debt, unchain yourself!