The best debt consolidation loans can help you manage your finances easily. Instead of paying several debts separately, you can just write one check to pay for all of them at one time. You also have the advantage of paying less in interest than you would before consolidating your loans.
To find out if this type of consolidation is for you, study the pros and cons, your needs and budget. Home owners have the benefit of using their house to get a home loan equity loan or mortgage refinancing. You get lower interest rates this way than with any other loan which will save you a lot of cash. The disadvantage of this type of consolidation loan is that you could lose your home if you are unable to pay off your debt.
If you do not own property, you cannot obtain of a home equity loan. That leaves you with another option which is a debt consolidation loan that uses a low interest credit card. If you can manage to get a card with enough credit to cover all your debts, then you can consolidate it all into one credit card debt.
You can also consult with a management company that can help you fix your finances. Approach these consolidation agencies and see if they can suggest a good way to consolidate your loans. In some cases, these agencies can pay off your creditors or negotiate to have your interest rates decreased. You, in turn will be tasked with paying the agency for their services.
You can find legitimate financial recovery agencies online. Some agencies can charge extremely high fees or demand high interest rates after they pay off your loans to other creditors. One of the objectives of consolidating your debts is to pay lower interest or monthly payments. It would be detrimental to get the services of a company that will do the opposite and increase your payments.
Look for a Better Business Bureau logo on the website of the agencies to see if they are legit. Before applying for a loan, you will need to present proof of income. Your new creditors will want to see that you can afford to pay off a loan. Make sure that your income statement shows a steady monthly income. Some lenders will want to see a certain percentage to income ratio.
Your lender will also want to have a copy of your payment history from past loans to see if you pay what you owe consistently. They will want to see that you pay your monthly dues on time. A late payment or two is all it takes to disqualify you from availing of a debt consolidation loan. You will have to be 18 years old or older to apply for this loan.
Another thing they will want to know is if you have lived in the same residence for a long time. The last thing your lenders will want is for you to disappear when it is time to pay up. Lenders will also prefer that you own a home or have equity on your property.