Excessive credit card debt can lead to difficulty paying monthly bills on time. A debt consolidation loan can help lower your monthly credit card payments by combining the high interest credit card debt into a single loan. Beware of counselors or "debt management services" that may make promises they cannot keep just to get an application.
Some of these services may charge higher interest rates than you are already paying in addition to charging a fee for services. A loan consolidation company will negotiate with each creditor on an individual basis to obtain lower fixed interest rates and stop other fees from accruing. Once a settlement has been reached there will be a set interest rate on the loan, provided the creditor is paid on time.
In the event of default resulting from late payment the creditor retains the right to resume collection proceedings. In order to apply for a debt consolidation loan, you must first gather all of your bills (that really does mean all of them), as well as income statements. The amount of time the process will take depends on how you choose to apply.
Some applications may be completed on a company website, while other companies handle the application process over the phone. It is vitally important to ensure the company is reputable before revealing any of your personal information. Reviews of these programs and companies are available online and by contacting the Better Business Bureau or Chamber of Commerce in the city where the company operates. These will help in the decision in selecting the right company to handle the debts.
Companies may claim there are "no restrictions" on loan programs offered. Always read the fine print before making a final decision. Some companies also provide the option of borrowing more than the debt amount owed - often considerably more than what is owed. The additional funds are then combined with the debt amount to reach the total loan amount.
A word of caution when considering additional funds: The idea is to eliminate the debt and an addition to the loan could exacerbate an already bad situation. The loan consolidation counselor may attempt to prompt you for a larger loan than you really need. If you really do not need the extra money then turn it down. You will thank me for that advice later.
With reputable companies, you will have several plans available to choose from. Working with a loan consolidation counselor and discussing your situation openly and honestly will aid in choosing the right company to handle your debt. Until you agree to their terms and commit to them, remember that they are salespeople trying to win your business.
Thinking about loan consolidation? Check out www.allaboutloanconsolidation.com and learn about unsecured loan consolidation and other related information.
