Debt consolidation is when you combine those numerous high-interest loans into a new, larger loan with a lower interest rate and extended repayment period. Did you know that managing your loan is not as difficult as most people thought it would be? A lifestyle change may be in order but there are other factors that you should consider when looking to merge your loans.
Merging your loans means bringing all your loans into one and using this big loan to clear smaller loans. The smaller loans are usually high-interest ones. It is imperative to note that because of the high-interest rates associated with the small loans, people tend to pay the interest throughout their repayment period without ever reducing the principal. This is counter-productive because you will be in a debt cycle. However, when you choose to merge your loans, you will be exempted from these high-interest rates because your lender will clear all your debt.
You can merge your smaller loans such as overdraft balances, bills, and credit card balances. In the conventional systems, loan consolidation is often offered by banks and other credit lending institutions. Some programs will allow you to repay the debt easily, unlike the banks which require you to provide collateral to qualify for a loan. There are different reasons why you should merge your debts. These include:
- Simplified payments – this is the main reason why people opt to consolidate their loans. Instead of tracking many repayments, you will only follow up on one loan.
- Saves money – small loans are associated with high-interest rates and this makes it difficult for borrowers to repay the loan on time. When you choose to merge your credit, your new lender will clear your debt by repaying all your loans. Your lender will repay off all high-interest loans and then give you a new loan with a competitive interest rate. It is important to note that your lender will negotiate for a better interest rate from your creditors and you will not have to deal with them anymore.
- Makes life easy – this is true if you choose to consolidate your loans with a low-interest loan. When looking for a lender, it is important that you ask as many questions as you can about the loan.
- Quick debt repayment – when you combine your loans into one large loan with a lower interest rate, you will be in a position to clear your debts easily. You can repay your loans without affecting your lifestyle. Do not underestimate your ability to get into a better financial position because once you have cleared your debt, you can formulate a plan to get out of debt.
How To Combine Loans
If you are looking for a lender to consolidate your loans, look for a lender who understands your financial situation. This is crucial because once you have your all your loans, you will be in a position to know what you should do to clear your loans. Once you have filled out a simple loan request form on our website, send the information to us. We will forward the information to the lenders in our network who will fund your loan request. Lenders in our network are quick when dealing with clients and you will get feedback as soon as your loan request is approved.
The interest rates of the loan are often calculated by considering your credit score and your current income. Once your lender has approved your loan request, the money will be disbursed to your checking account or you can give your lender the authority to use the money to clear any outstanding debt. It is important to note that your credit score is a statistical representation of the likelihood that you will be able to repay a loan. If you have a low credit score, it means that you are risky when it comes to lending. However, you should not be worried about a less than stellar credit history because we will connect you to lenders who will fund your loan request even if you have a poor credit score. Bad credit loan consolidation is something that you should consider if you are having sleepless nights because of debts. Lenders in our network will advance the loan to you as long as you meet their criteria.
Why Choose To Consolidate Bad Credit Debts?
Collateral for a loan is an asset that you pledge as a guarantee to your lender. Should you default the loan, your lender can seize the property or asset. Common collateral accepted by conventional lending institutions include cars, house or any other assets that can recover the money borrowed. If you have a high credit score, you can easily access loans from conventional lending institutions such as banks. However, for people who live from one paycheck to another, borrowing could be quite challenging. Do not despair if you have a poor credit history because we will connect you to lenders in our network who will fund your loan. Your lender will negotiate with your creditors to get better interest rates.
You should ask yourself a number of questions before you choose to combine your loans. You should not be pleased that your interest rate is getting lower. You should formulate a plan to overcome excess debt and find out why you got into debt in the first place. A common problem is that many people spend more than they earn. Overspending is a common practice among many American and this makes people live in a cycle of debt. Some of the loans that you can merge include:
- Home equity loan – this is where you take out a second mortgage if you have a good equity in your home. This option will give you the lowest interest rates.
- Line credit – this is for people with better credit history and can access credit facilities from banks. You can use this loan to combine all your loans.
- Debt consolidation through lenders – this is the most viable option for people with poor credit scores. We will connect you with lenders who will finance your loan application.
In summary, whether debt consolidation is a right option for you or not it largely depends on your ability to plan your finances. You can utilize other financial tools that will help you make better decisions. Planning and budgeting are some crucial practices that can help you overcome debt. This is important because you will know where to cut spending and where to change your spending habits.