debt consolidation loans

Debt Consolidation Loans for Bad Credit

July 5, 2014 by arizona

Because your credit is part of your financial record from the time you become an adult, you may have inadvertently damaged it in your younger days. If you have bad credit, you might wonder if it’s possible for you to get your debts consolidated. Here is a little information on bad credit and debt consolidation.

What are some signs that you may need to look for debt consolidation loans for bad credit?

When you are struggling each month to make your payments or make them in a timely fashion you may have realized that you need assistance. Let’s look at a few other signs that it may be time to look into getting debt consolidation loans for bad credit.

Bill collectors call frequently.
You’re only making partial payments.
You’re using one credit card to pay another.
You miss payments or are late.

Can I get debt consolidation loans for bad credit?

There are still a few options for you to explore as far as debt consolidation with bad credit. One of these is the payday advance. On the plus side, these are usually easy to get and not secured by anything except the agreement to pay and sometimes a post dated check.

Another type of debt consolidation loan for bad credit is a simple personal one. With this type of loan, you would go directly through the lender, so it does cut out the middle man. Remember that even loans specifically for debt consolidation often give better interest rates to people with better credit though, so always go into it expecting that.

These loans do have the added bonus of being very easy to handle. Many times you can actually go through the whole process online, and have the money deposited directly into your bank account.

Some ways to get a debt consolidation loan for bad credit

Your first step should be to examine your personal situation closely and see what adjustments can be made to your budget to make things run more smoothly in your life. Sometimes the trouble started because of accident, injury or some other unforeseen circumstance, but this isn’t always the case. So, just clean it up where you are able.

Next, you should sit down and make a list of your monthly income and your expenses in order to figure out how much you need to borrow to consolidate all of your debts into one payment. After this, research some actual lending institutions and get some information on requirements and interest rates available. Do keep in mind that you may have to get a co-signer if things are really bad with your credit or payment/job history.

You should also understand ahead of time, that if you are refused a loan even with a co-signer, your only choice may be to pursue a bankruptcy. This seems unpleasant, but it might come down to necessity at that point.

What else is there to know about debt consolidation loans for bad credit?

While it can be difficult to get loans with bad credit or even slightly imperfect credit, they can be very useful when it comes to consolidate your debts into one easy monthly payment. This makes it easier for you to get caught up with everything and eventually even improve your credit.

There are a growing number of companies that specialize in the service of debt consolidation. Wading through all of the information that they put out can be daunting but, let’s look at how to make the decision a little bit easier.

When you decide that you are ready to take the steps to debt consolidation, you first should sit down and go through your financial information. If you are too overwhelmed by doing this on your own, remember that there are counselors that specialize in this type of service and you can always reach out to them. That’s what they are there for. This is very important because you need to know what you owe and what your payments will be like. There are scams out there, so you want to have all of the information on your own finances at your fingertips and easy for you to understand.

After this you can easily contact a lending institution and feel more comfortable with discussing this type of loan with them. Remember to pay careful attention to the loan repayment, so that you don’t get in a worse situation.

With all of this information available, you should be able to make an informed decision and feel much more comfortable about the direction that your finances are heading. Even though it can seem like a huge thing to undertake, once you start getting everything organized in your budget and paying your debts off in an easier fashion, you will be well on your way to improving your credit and your outlook on life.

What to Do If You Are Rejected From a Loan

February 4, 2014 by arizona

If you apply for a loan and you are rejected many lenders tend to use a 2 digit reason code to tell you why, instead of a proper explanation. Instead of explaining fully why you have been rejected from a loan lenders are using the codes as general rejections and all you have to do is look at the glossary and see which part of credit history made you get rejected. In the past lenders legally did not have to disclose information with borrowers as to why they were rejected and although using codes has this information, it is still quite confusing to the consumers as the explanations are so equivocal. If you have been rejected from a loan and are struggling to understand the codes, here are some ways to make sure you stay in control:

If you are unsure about your code just ask

There are many complaints about the reason codes – they use terms that people are not familiar with and do not define the codes properly, therefore confusing people when they should actually be helping them understand why they have been rejected. Although they have been designed to help the borrower see why they have been rejected from a loan the language the lenders use is often confusing. If you find a reason code unclear ensure you understand it properly before you accept the lenders decision. VantageScore has created a website where you input your reason code and it gives you a more informational explanation or you could just simply contact the lender and ask them what it means – they will be happy to help!

Unethically rejected

If your credit score is poor you may feel like you have been unethically rejected when applying for a loan or any type of credit. You are allowed to examine the situation and check that the lenders have not overlooked anything and that none of your information was used unfairly. Make sure you don’t let the situation pass – sorting it out could help you to better your credit score and it could help you get the credit or loan that you want. If there has been some information used that shouldn’t have, they will remove this and go over your application again – giving you a second chance at obtaining a loan or credit.

Keep an eye on your credit score

Make sure you look at your credit score on a regular basis to see what your credit is like and which bracket of credit you are in. You can get three credit reports a year – free of charge – but it is better to set up a tracking service, which will allow you to check and monitor your credit more regularly. Therefore if you do get rejected from a loan you will not be shocked as you have your credit report there so you can see why you have been rejected.

Boost your credit score

Your credit improves slowly over time, but it is vital to take action as soon as you notice a decline in your credit score. Every little action you make will improve your overall score. A decline in you score may be down to a clerical mistake or late/missed payment. As soon as you discover an error fix it right away to ensure your credit is not harmed. You can also improve your credit score by making payments on time and keep accounts that have been paid properly open – even if you do not use them.

Credit scores affect a lot of things

As you probably already know it is important to check your credit report regularly. Your credit score is normally what sways a lender when it comes to offering or rejecting you for credit or a loan. A credit score can affect a number of things:

Mortgage terms
Interest rates
Apartment rental qualification

It is important to check your credit score regularly so you know how to keep yourself from getting into financial trouble later on. The more you know about your credit score, the better your relationship will be with your finances and the better your finances will be in the future. Read your credit report carefully so that you understand it and you know what things you may or may not meet the requirements for. When you know what it all means you will understand what you qualify for and what to do in the future.

Try to avoid difficult situations

When you have been rejected from a loan try not to get yourself into a situation that makes you feel confused. If you know how your credit score affects you financial openings – even an offer of a job – you will stop yourself being confused at a later date. Let’s just hope they don’t start using reason codes for job rejections too.

Debt Consolidation Online Services

September 30, 2013 by arizona

Though most debt consolidation online service providers are genuine in their desire to help their clients with their debt problems, they all have to make money to continue in business. The two keys to profitability in the debt consolidation business are:

Successfully assembling a portfolio of loans that will produce enough interest income to offset potential loan default losses;
And keeping operating costs as low as possible.

Companies that specialize in debt consolidation online services have an obvious cost advantage over their “bricks and mortar” competitors – except in cases where the client has been able to maintain a high credit score. In those cases, the client’s bank or credit union may be in a position to provide better debt consolidation loan terms. A high credit score assures that the client’s default risk is very low, and if the client already has a borrowing, checking, or savings history with the bank or credit union, the cost of qualifying the client for an additional loan is minimal.

Borrowers with credit scores lower than the threshold for bank or credit union loans may need to seek debt consolidation assistance from a specialty debt consolidation company.

Risks and Advantages of Using Specialized Debt Consolidation Companies

Since specialized debt consolidation online companies don’t expect to serve clients with strong credit scores, they can start out with three basic assumptions about the clients that will seek their services:

Prospective clients already know that they will have to pay higher interest rates than they would at a bank or credit union;
The clients wouldn’t be there unless they had debt levels that were causing them significant pain;
At least a portion of the clients will need a loan quickly, and a will be experiencing a degree of stress that impairs their ability to carefully evaluate the credit terms offered.

Those three assumptions make the specialized debt consolidation online business attractive to operators willing to cash in on the vulnerabilities of the clients they serve without much (or any) regard for actually helping the clients. Choosing a reputable debt consolidation company is important. Fortunately there are plenty to choose from.

The good debt consolidation firms take the time to fully understand the client’s financial circumstances and put together a debt consolidation package that is the best realistically possible. If a simple debt consolidation loan does not provide a practical solution, some specialized debt management companies offer contracts (sometimes called Debt Management Plans or DMP’s) that allow the company to collect a single affordable monthly payment from the client, and then negotiate with each of the client’s creditors for lower interest rates, extended payment terms, or even partial debt forgiveness. They use the offer of an assured portion of the single payment the client makes to the company as negotiating leverage.

Signing a contract for a Debt management Plan may be the only way short of petitioning for bankruptcy for a family to get out from under their debt burden. There are, however, a number of things to consider before signing a contract:

There are a lot of expenses incurred by the company administering a Debt Management Plan, and those expenses get passed along to the client, along with a profit margin sufficient to cover the costs the firm must absorb when other clients default on their monthly payment commitment.
Debt Management Plans may include debt consolidation loans which increase the total number of monthly payments required to pay down debt without significantly lowering the interest rate on the debt. The result is that the client ends up paying a great deal more interest than they would have without the DMP.
Any Debt Management Plan that includes forgiveness of all or a portion of a debt will have a serious negative effect on the user’s credit score.
Individuals considering paying a debt consolidation online service provider to negotiate lower interest rates or extended payment terms from their creditors can often do as well or better by contacting the credit card issuers themselves.

The Right Way to Use Debt Consolidation Online Service Providers:

If you think that the using debt consolidation online services is the best course for you and your family, here are some guidelines to follow:

Get a current copy of your credit report (and your spouse’s if applicable);
Make a complete list of all your debts;
Make a complete list of your fixed and variable monthly expenses;
Take the credit report(s), list of debts, and the lists of fixed and variable monthly expenses to a qualified non-profit debt counseling service to get an objective opinion as to whether using debt consolidation online services is really the best option for you and your family;
Be a smart shopper. Look at fees published on each firm’s website, and beware of firms that promise to solve all of your credit problems at little or no cost to you. If claims seem too good to be true, they usually are;
Check each firm’s track record with your community’s Better Business Bureau;
When contact the company you select, have a clear idea of what services you want, and what those services are going to cost you.

Poor Credit Loans: A Good Idea?

September 14, 2013 by arizona

Poor credit loans can be hard to find, and they are almost always more expensive. Difficult economic conditions, simple bad luck, or combination of the two, can damage anyone’s credit score. Once your credit score is damaged, it can take years to repair. Meanwhile, if you need to do a debt consolidation loan, or if a sudden need for capital arises to meet an unexpected emergency, getting a loan for the cash you need can be a real problem. Applying for credit in the wrong places, and getting turned down is not only frustrating, it can further damage credit score. Because commercial banks and credit unions usually have policies which prevented their loan officers from extending loans to applicants with credit scores below threshold level, you’ll probably have to work with the specialized non-bank lending companies. Interest rates and fees charged by these organizations are always higher than those available from banks and credit unions. For a variety of reasons, however, credit terms available to you can vary enough to make a real difference from one non-bank lender to another.

The Business of Making Poor Credit Loans

Companies that make poor credit loans are different in several respects from commercial banks and credit unions. They understand that the borrowers they serve wouldn’t be coming to them if they didn’t really need the money, and often need it quickly. They also know that the default risk with the clients they serve is higher than would be acceptable by commercial bank or credit union. Success in the poor credit loans business depends on understanding default risk for every client they serve, and ensuring that they charge each client a high enough interest rate so that in the aggregate, the interest and fees on each individual loan is high enough to more than offset the predicted default rate. An interesting but important point is that most of the larger companies in the poor credit loans business put together packages of loans they have made to individuals, and sell the packages to third parties, thereby recovering the capital they have lent so they can lend it again. In some cases the bundle of loans that they sell to the third party include a guarantee that the default rate for loans within the package will not exceed an expected level.

Tips for Finding the Best Sources for Poor Credit Loans

As stated above, companies that extend loans to people with a troubled credit history expect to get much higher fees and interest rates than banks and credit unions. That does not mean that there is no competition between the firms engaged in this type of lending. Here are some tips to help you take advantage of the competitive forces within the industry:

Before you start your search for lender, get a copy of your credit report and review it carefully for errors or evidence of fraudulent use. Errors and fraudulent use do occur, and successfully contesting them can rapidly improve your credit score.
Don’t approach troubled debt lenders with a bull’s-eye painted on your face. No matter how serious you personally believe your need for a loan is, take the time to gain an objective perspective on your financial circumstances. Talking to an experienced debt counselor prior to beginning your search is often a good idea.
As with gas stations, on any given day there is always some variation between prices, and the biggest companies don’t always offer the best available deal. An experienced a debt counselor with his finger on the local market may be able to point you towards highly efficient smaller companies eager to have your business.
Once you have assured yourself that your credit report is in order and you have an objective understanding of the size of the loan you need and the monthly payment can realistically afford, talk to a number of loan officers at different firms before completing an application (and authorizing a credit check). If you know your credit score, and have your credit report with you, a loan officers should be able to give you a fairly accurate estimate of interest rate and loan terms their company can offer you.

Tips for Repairing Your Poor Credit Score

While you may have an urgent need for poor credit loan today, over the longer term, knowing how to improve your credit score can paid big dividends. Here are some tips to consider:

As quickly as you can, establish a “rainy day” savings account. The most important step in improving your credit score is to establish a history of on time payments. Even a small savings account may be enough to help you through a tight budget month without adding new “late payment event” to your credit history.
Having a number of credit cards is not necessarily bad for your credit score. What can hurt your score, however, is credit card balances that remain near the credit limit for the card. Focus on paying down cards near the credit limit first. Making regular payments on a number of cards with low balances can actually help your score.
When it comes time to replace a household appliance, instead of putting the appliance on a credit card, look for an opportunity to take advantage of an installment loan with payments you know you can handle. Paying off installment loan on time with no late payments will also strengthen your credit score.
Be careful not to authorize too many formal credit checks by lenders that you don’t end up doing business with. A large number of credit checks are seen as a red flag on your credit report, and can lower your score.

A Final Note

The business of making poor credit loans can be highly profitable, it has often attracted the attention of individuals looking to profit from the misfortunes of others. Watch out for firms that have just opened shop in your community, and are offering terms that seem too good to be true.

The Benefits of Debt Consolidation in Arizona

August 6, 2013 by arizona

Modern society presents us all with a virtual minefield of opportunities to take on more debt than we can easily handle. Do any of these “debt enhancers” sound familiar:

An unsolicited credit card with a low interest rate that skyrockets after a year, or if you’re a single day late with a monthly payment!
A layoff or unexpected gap between employment contracts
The uncovered expenses of an automobile accident
The loss of one income in a two income family
The gift a loved one really desires, when “no” is not an option

And this list doesn’t even include the costs of the numerous impulse buying opportunities that highly skilled and well paid marketers are constantly tempting us with. If you are a young person already carrying the burden of Student Loans, or anyone else facing credit card debt problem, take a moment to talk to trusted friends or relatives. It is more than likely that almost everyone you know has taken advantage of the benefits of debt consolidation at some point during their lives. Most will say that debt consolidation was a smart thing for them to do at the time. The ones that care about you will also caution you that using a debt consolidation loan to allow yourself to run up still more debt is a REALLY bad idea!

Here are some factors to consider if you are thinking about a debt consolidation loan:

Debt Consolidation Loans Can Lower the Cost of Getting Out Of Debt

One of the principal benefits of debt consolidation loans, of course, is that the interest rate is almost always lower. More of your money goes to paying down your actual debt, and less goes to profit for the lender.

Homeowners who use a second mortgage as the vehicle for achieving the benefits of debt consolidation may reap the additional benefit that the interest they pay on their debt consolidation loan may be tax deductible.

Debt Consolidation Loans Can Get You Out Of Debt Sooner

The combination of low minimum payments and high interest rates can make progress on paying down some credit card balances nearly impossible. People sometimes find that the monthly interest charge added to their balance, plus the few new purchases they simply had to put on the card, more than wipe out any reduction in the outstanding balance from the small monthly payments they make. Properly constructed debt consolidation loans assure you that each monthly payment will result in at least some progress toward reducing the balance.

If your debt consolidation loan allows it, making occasional payments, even small ones, between your scheduled payments, can significantly shorten the time needed to pay off the loan. Talk to your lender for the surprising details.

Debt Consolidation Loans Reduce Stress

Keeping track of the balance due on a half dozen consumer loans with different payment dates each month can be a real nightmare. With a debt consolidation loan you have just one single payment to worry about, saving you time and anxiety. You always know the exact amount you must pay, and the date that one payment is due. Having the payment automatically deducted further simplifies matters.

Some who have struggled with too much debt, and too many payments, for too many years, insist that the most single most important benefits debt consolidation brought to them was ending the embarrassing and humiliating collection calls that always seemed to come when guests were in the home or dinner was on the table.

Debt Consolidation Loans Make Wise Investments Possible

Life is a precious gift. There isn’t much we can do to change what has happened in the past, but there is much we can do to shape the future. One of the principal benefits of debt consolidation is that it can provide the cash flow to make meaningful investments in the future that would otherwise not be possible. These investments may be in the form of minor home improvements that lower fuel consumption cost while adding to the resale value of the home, or educational opportunities to increase future our earning potential.

Importantly, part of that extra cash flow may also be used for increased contributions to an IRA or the 401(k) plan offered by your employer. Today’s typical American can expect to live to 85 or older. Social Security and Government health benefits are intended to cover only a portion of our post retirement living expenses. Getting money safely invested in a tax sheltered retirement account is vitally important, and the earlier one starts, the better. Yes, that does mean you should start saving for retirement even if you are still paying down old debts.

Remember, however, that you will not enjoy the benefits of debt consolidation if you are unable to manage impulse buying, or if your household budget contains fixed costs such as mortgage payments, real estate taxes, or similar costs associated with the maintenance of a second home. In cases where the benefits of debt consolidation alone are insufficient, the services of a professional budget advisor may provide the best path to regaining control of your current and future financial security.

Debt Consolidation Loan Checklist To Avoid The Pitfalls

June 20, 2013 by arizona

If you want to use debt consolidation loan as a way out of your debt situation, you have to make sure you qualify for it. While it is very tempting to run away from your debts, you need to face the music and own up to the financial mess that you created. This debt relief option is effective but to know if it is the right solution for your problems, here are a couple of things that you may want to look into.

First of all, you have to qualify for a loan that is big enough to cover all, if not most of your debts. The idea is to use the new loan to payoff your other debts so you can enjoy a single payment every month. If you know that you will only qualify for a loan that is enough to pay only 2 or three of your 7 debts, then you may want to consider another solution for your debts.

The second item in your checklist is the interest rate. You want to aim for a lower interest rate than your current because you are after a lower monthly payment. If it ends up to be bigger like payday loans, or something similar, you could end up making your debts worse.

As mentioned, it should decrease your monthly contribution. This happens because you have stretched your payments over a much longer term. If this is not achieved by the loan that you are applying to, then you should opt for a different debt relief program.

The fourth in the checklist is your ability to pay the monthly dues in the next 3 to 5 years. In this debt relief option, your debts are not reduced. It is only restructured so it is easier to pay off. Because of that, you need to secure your payments by creating back up plans. This is more difficult to guarantee which is why you are highly encouraged to set up supplemental income sources. With the ease brought about by the single payments, you should be able to concentrate on growing your income by either taking in more work or setting up a personal business.

These four items in your checklist must be met to ensure that you solve your debt problems. If you want to use this option, be very careful about racking up more debt. Once you have paid off what you owe your credit cards, for instance, you might be tempted to use them again. Never forget that debt consolidation loan is only about restructuring your debts, not paying it off completely. You still have to do that so make sure you do not add to what you owe.

Another part of what you should do is to accept that something has to change in your life. Most of the time, debt is a result of overspending. You had been spending more than what you earn. You need to change this and start living within your means.

What Is The Difference Between Debt Consolidation Loans And Debt Settlement?

May 13, 2013 by arizona

Over the course of making it through life, we have decision points that either makes or breaks us. It could be about educational decisions, career and the like. They each have their own take on how well we live our life but none is as unique as the financial decisions we make. These has the lingering effects that we feel well into the twilight of our lives. And getting on the wrong end of those financial decisions could mean debt.

Debt can come in many forms just as getting rid of it has many options to choose from. The two most common alternatives are debt settlement and debt consolidation and choosing one from the other has different sets of pros and cons. It all depends on your current financial status and need.

Debt consolidation loans require getting financial aid so that you can pay off all your other debts. The whole idea is to combine your debts by paying them all off and maintaining the one loan that you used to pay. The end result will be a single and more manageable payment instead of multiple accounts. Another target is a lower monthly payment. There are personal loans that last for 5 years, this allowing you to distribute your balance over a longer payment period. It will result in a lower monthly payment. That lowered payment is also a result of low interest rates. Getting a low interest loan is important to make this happen. That can be accomplished if you have a good credit score or you have a collateral. But if not, then you may have to consider your other options.

Getting a loan to combine your debts also require you to have a steady income. You are not reducing your debt balance. Despite the lower monthly contribution, you will still end up paying for everything that you owe. If you cannot afford that, then your obvious option is debt settlement.

As a debt relief option, debt settlement is a great option because it aim for the reduction of your balance. This is done through debt negotiation. You can do it on your own or you can hire a professional to help you out. The whole process begins by defaulting on your payments deliberately. You want to convince your creditor that you are in a financial crisis and not paying your debts is one of the effective ways to do that. Instead of sending payments, you will put that amount aside for your settlement fund. You will then concentrate your efforts on convincing your creditor that you cannot meet payments anymore. You will haggle to pay pennies for every dollar that you owe. When you reach an agreement, you will pay only a percentage of your debt and have the rest of it forgiven.

As appealing as the whole reduction may sound, you have to remember that defaulting on payments will decrease your credit score significantly. If you do not feel comfortable with this and you have a steady income anyway, you can always opt for debt consolidation loans instead.

What’s Next After Your Debt Consolidation Loan Is Approved

April 29, 2013 by arizona

Debt consolidation loans may be an effective debt solution but you need to realize that it has a high fall out rate. That does not mean to say the whole concept is flawed. There have been success stories but unfortunately, these do not make up the majority.

If you think about it, the reason why debt consolidation loans seem to be unable to help with debt is because of how consumers treat it as a debt relief option. Sometimes people are so focused on paying off their debts and once they get the loan approval that will pay it off, they start to relax. They are under the impression that the debt problem is over because the confusing multiple bills are now gone and replaced by one big loan. Also, if the debts paid off are mostly credit cards, it will be very tempting to use them again because they are all on zero balance once more.

These are only a few of the reason why financial experts dislike debt consolidation loans. You need to realize that it all boils down to how you react to the loan approval. Everything that leads from there will either be a success of failure depending on how you act.

So how should you act once your debt consolidation loan is approved?

First of all, you want to pay off your debts immediately. Don’t make excuses to pay only a portion of the debt and then spend it on something else. Put everything into your debt payments as planned.

Once you have paid off all your dues you have to do something about your credit cards. You can either close them off except for one, or you can keep them in a place where you will not be able to easily access them.

Another task that you have to accomplish after you got your loan approval is to map out how you will pay off this new debt. No matter how good it feels to completely pay off your credit card debts, you need to keep in mind that you haven’t solved it yet. You merely shifted your debts around but you still have to pay them off.

Create a debt payment plan and make sure that you will stick to it. You can also create a budget plan or revise it if you already have one. Make sure both your debt payment plan is budget coincides with each other. Put in your budget the amount indicated in the other plan so you don’t make a mistake of forgetting any payment. This is very important for your credit score too. As you pay off this loan diligently, you can expect that your core will rise steadily.

Lastly, you should put aside an amount every month so you can grow your reserve fund. Saving should be combined with your debt payment efforts because it is one of the most effective ways of keeping you from another debt situation.

Opting for debt consolidation loans will bring you towards financial freedom but you need to be very cautious about how you will manage it once you get the loan approved. In the end, it’s still about how you make smart financial decisions.

Why You Need A Debt Payment Plan In Debt Consolidation

April 16, 2013 by arizona

Debt consolidation, especially the one involving loans should be done with a debt payment plan. This is important because unlike debt management, you are working on your credits alone. There is no credit counselor helping you manage your monthly payments. In fact, even with the presence of an expert, they still create a debt management plan – which is similar to the debt payment plan.

Implementing your own debt relief program is tough because getting yourself in debt means you are not the best person to handle finances. You have a lot to learn and doing it alone may be tougher than you think. But what you lack in expertise can be compensated by adequate preparation. This preparation literally means creating a plan that will help you monitor your monthly contributions. The best way to do this is through a debt payment plan.

Before you apply for a loan, you need to know the problem that you will solve and your financial capabilities. You need to map out a payment plan that will allow you to pay off this new credit account. You have to identify the accounts that will be paid by the money you will borrow and how you will ensure that they will no longer incur any more debt.

The debt payment plan is comprised of two smaller plans: budget and payment schedule.

Creating a budget is simple enough. It just involves detailing your income and your expenses. The key to input the smallest amount of your income for the last 6 months and to provide the complete and detailed list of where you spend it on. These are important because you want to make sure that you will never fall short. When you have both, you need to get the difference so you know how much is left of your income after the expenses had been paid off. This is called the disposable income.

The disposable income will play a big role in your payment schedule. This will detail how much will be put into your loan, or other debts that were not covered in your debt consolidation loan. You will indicate when and how much should be sent to your lender. This is to ensure that you will never miss out on a payment.

Being organized about your debt relief program is very important if you want to keep yourself from failing. There is no one else who will accomplish this but you. It is better to be as detailed as you can – especially when you are listing your expenses.

Once you have completed your debt payment plan, make a commitment to follow it. Regardless of how perfect your plan may be, it will be useless if you fail to stick to it.

On a last note, make sure that you allocate funds for your savings. One of the best ways to stay out of debt is to have an emergency fund that you can use when your income is suddenly compromised. Being prepared is more vital than ever – at least that is what the recent recession should have taught you.

Consolidate Credit Card Debt Instead Of Sticking To Minimum Payments

April 11, 2013 by arizona

If you are wondering how you can get out of your credit card debt, there is one thing that is for certain: stop sticking to the minimum payments. This payment requirement is one of the traps that will get you in debt for a very long time. Getting out of debt will require a lot more than just scraping the surface of your debts – which is what you are accomplishing with the minimum payments.

The thing about credit card debt is that the high interest rate and the finance charges will keep your debt balance high. You need to make significant contributions because you will be old and gray before you complete your card payments.

Here’s an example of what you are up against. If you have a credit card debt worth $10,000 with an interest of 20%, your minimum payment will have to be around $400 every month. If you stick to that, it will take you more than 14 years or 172 months to completely pay off what you owe. Throughout that period, you will be paying off $6,989 worth of interest. Would you really want to waste that amount of money on your creditors? If not, then you need to look for another alternative to pay off your debts.

If you are thinking about your limited income and the fact that you can only afford the minimum payment, then you should not give up hope yet. There is a debt relief option that targets to lower your payments without necessarily spending forever to pay off your debt. You may be hesitant to lower your monthly payment because the minimum in itself will take you more than a decade to complete payments, what more if you pay below that?

Here’s how it works. The debt relief option is known as debt consolidation loans. You apply for a loan that is big enough to pay all your credit card debts. Personal loans, especially secured loans have a low interest rate. They are oftentimes much lower than credit cards that average at 18%.

If you search for a personal loan calculator online and calculate the same $10,000 debt and an estimate of 10% interest rate, the software will indicate that you only pay $212 a month. If you stretch it over 60 months or 5 years, you only pay off more than $2,700 worth of interest. Of course, all of these are just estimates and every lending institution will have varying rates. However, you can see how it is a better deal compared to paying off through the minimum technique alone. If you can afford a higher contribution every month, you can cut down the interest rate, payment term and the interest amount that you will end up paying for.

The key is to get a loan that has a low interest rate. This can be done by having a good credit score. If you haven’t missed any payments yet, you may even get an interest that is as low as 6.5%. Another way to score that low interest rate is by putting up a collateral that will make you qualified for a secured loan. If you can stick to the payments, you will not be endangering your asset from being taken by the lender.