SimplyFinance - Consolidation Loan

Debt Consolidation Risks

2007-08-19T23:00:00Z

Consumer debt is a big problem for many UK residents, and many resort to taking out a consolidation loan to reduce or eliminate their debt burdens. However, is a consolidation loan the right option for getting rid of consumer debt? What are the dangers of a consolidation loan?

Risks Inherent to a Consolidation Loan

People with a bad credit can expect to shoulder higher interest rates on their consolidation loans because lenders will see them as a larger risk. Monthly savings may be quite small compared to if they had paid off individual loans and debts independently.
A debt-ridden individual might hire the first debt consolidation counselor or debt consolidation company that they find. This is one of the biggest dangers of a consolidation loan because debt-ridden people are often quite desperate because the due dates for their different loans are creeping up on them. However, debt consolidation counselors and debt consolidation companies come in all different varieties and levels of reputability, so be sure you know what you are getting into before you agree to anything.
People who have incurred a sizable number of debts should know how to identify what caused them to get into trouble in the first place. Even if you succeed in paying off your debt consolidation loan, you might still get into debt again afterwards if you don't attend to the root of the problem. Common causes could be lack of self-discipline when it comes to paying debts or a habit of taking out loans to finance impulse buying. A debt consolidation loan is not a cure-all, and it certainly cannot correct such bad habits.
Not all debts are covered by every consolidation loan out there. You will have to ask carefully if each one of your lenders can be paid through the consolidation loan you choose. Some common forms of debt that are usually covered by consolidation loans are bounced checks, student loans, personal loans, department store cards, medical bills, and credit card debt.
You might be forced to pay a hefty commission charge to the consolidation loan company, so be aware of any such charges and fees before you sign for the loan.
By taking out a debt consolidation loan, you may be doing more harm than good to your credit rating, if you are not careful. Be sure to inquire with your consolidation loan company about this.
A secured form of consolidation loan will require that you post some kind of security before a loan is granted. Typically, the security would be your home. This means that if you fail to keep up with payments, the security you posted will be sold by the lender to recover the amount lent to you. If the security is your house, you'll wind up homeless and still heavily in debt.
It is true that a longer period of payment will allow you to breathe a little easier every month, but compute the total amount of payment you eventually wind up paying, and you may find that your payments will actually be much larger in the long run (compared to if you paid your individual debts immediately). If you do not like the idea of having to pay more in the long term, then maybe you should look for other debt payment options.
There are debt consolidation companies that try to motivate their frontline staff to work harder at getting consolidation loan applicants by offering big commissions for bigger loan amounts. Meaning, if the frontliner is able to get you to borrow a large consolidation loan amount, his commission is also quite big. The bigger the loan amount you take out, the bigger is his commission. You can avoid such companies by examining the fine print of their offers. Also, be aware of how much you really need to borrow that you're not tempted to borrow more that you actually require.
Predatory lenders are known to impose balloon (or extremely large payments) at the onset of the payment period for the consolidation loan. This is one of the significant dangers of a consolidation loan because many desperate borrowers lack the financial capacity to pay these balloon payments, and they default on their loans. The dangers of a consolidation loan are magnified if the consolidation loan is secured, meaning the lender can then take possession of the security of the poor borrower. Be wary since not everyone is nice and benevolent, especially in the financial world.

A consolidation loan can be avoided if you practice caution, and if you get good advice before deciding on anything. Read the fine print of any consolidation loan agreement very carefully before you sign on the dotted line.

If you'd like to discuss the option of a consolidation loan further, take a moment to fill out this simple questionnaire, and one of SimplyFinance's representatives will contact you shortly to introduce you to a reputable and qualified consolidation loan lender.

Personal Loans for Debt Consolidation

2007-07-25T23:00:00Z

Taking out a personal loan may be a good solution to your financial burdens. Renovating your home or taking an amazing holiday may have put you in more debt that you can handle. One use of a personal loan is to clear your existing high interest debts by paying them all off. This leaves you with only a single payment, and a single interest payment, to make each month instead of multiple payments, all with high interest rates.

If you are a home owner, you can easily get a debt consolidation loan through a home equity loan. Your house is kept as collateral for this type of debt consolidation loan. The amount of the loan varies according to the amount of equity you have built up in your home. In this case, you would be taking out a secured personal loan with your home as the security. If you fail to make payments, your lender may seize your house as repayment.

If you rent or if you do not have anything to put down as security, you can take out an unsecured private debt consolidation loan. Interest rates for this type of loan are higher and the term of the loan tends to be shorter than for a secured private loan because unsecured loans are riskier to lenders. They have no security in the case that you are unable to repay your debt.

To find a debt consolidation loan you have to research to find the lender offering the best competitive rates. The internet is a great tool for this kind of research. Online lenders will help you find the best possible rate for you, and all you have to do is go online and fill out a simple form with a few questions.

If you find yourself bogged down with multiple high interest bills each month, consider a personal debt consolidation loan. You will only need to pay a single payment each month, and you will only have one debt collecting interest. You will be able to choose the term of your loan, and you will be able to pay it back more flexibly then you would be able to pay back multiple debts. Getting a personal debt consolidation loan will not instantly rid you of all of your debt, but it will help you manage it more efficiently.

If you'd like help finding the best debt consolidation loan deal, take a minute to fill out our short and simple form. Once you've done so, a SimplyFinance representative will contact you to introduce you to a loan lender that will search to find the best consolidation loan deal for you.

CLICK HERE TO CONNECT WITH A DEBT CONSOLIDATION ADVISOR TODAY!

Consolidation Loan Basics

2007-08-16T23:00:00Z

Let's tackle consolidation loan basics by defining what a consolidation loan is. A consolidation loan is more popularly known as a debt consolidation loan. It merges and consolidates different debts from different lenders into one single payment. With the proceeds of a consolidation loan, you will pay off the balance of all your outstanding debts, and instead of paying multiple payments each month (all with high interest rates), you will pay a single, low interest monthly payment to your consolidation loan lender.

How to Get a Consolidation Loan

Consolidation loans are provided by financial institutions like banks and by specialty consolidation loan lenders. To secure a consolidation loan, you'll be required to meet the following criteria and provide the following materials, as specified by your lenderL

A genuine copy of your monthly income (this is the basis for computing repayment amounts per month)
A breakdown of your budget per month (out of which you must allocate a certain amount for repaying the debt consolidation loan)
The existence of collateral under your name (which will act as the security for your consolidation loan)
The presence of a co-guarantor or co-signor (who will absorb payments for the consolidation loan in case you fail to pay on time)

Types of Consolidation Loans

Consolidation loans come in both secured and unsecured varieties. Here is a brief description of both types:

Secured consolidation loans – You will need a form of security (such as real estate or your car) to be posted before you get your loan. Its advantage over an unsecured consolidation loan is that interest rates will be lower. Another advantage is that you will be given a longer term in which to repay the loan. However, if you fail to meet payments on the consolidation loan, the security you posted will be sold by the lender.
Unsecured consolidation loans – With an unsecured consolidation loan, you will not be required to provide any collateral or security. The catch, though, is that you will be required to pay a higher interest rate because you are a riskier borrower than a person taking out a secured loan.

Consolidation Loan Benefits

A consolidation loan offers many benefits to a debt-ridden individual, such as:

Your cash outflow will be regulated because you are obligated to make payments on your consolidation loan. This will help discipline you.
Interest payments may be smaller (compared to your other loans and debts), so the debt burden is lighter.
An extended term of repayment for a consolidation loan will further ease your debt burden per month, leaving you more funds for other needs.
People who are filing for bankruptcy can take advantage of special interest rates accorded during bankruptcy filing which may also lighten the debt burden for you.
You can choose a consolidation loan that has a fixed interest rate, so that you will not have to shoulder variable interest rates that fluctuate from time to time.
You needn't deal with multiple lenders and creditors because you will only be dealing with the consolidation loan company that bought your existing debts and provided you with a debt consolidation loan.

Consolidation Loan Disadvantages

A fact about consolidation loans is that they are not your ticket to financial heaven. They do have some disadvantages, like:

You have to pay fees to the consolidation loan lender, which may be substantial compared to the cost of your earlier unpaid loans. You have to be good at computing the costs of either side to decide which option will be more financially beneficial to you.
If you fail to keep up with payments for your consolidation loan, the lender has the right to sell of your security, so if you put up your home as security, you may be left homeless, and still mired in debt to boot.

If you'd like to discuss the option of a consolidation loan with a debt specialist, take a moment to fill out this simple questionnaire, and a representative of SimplyFinance will contact you shortly to put you in touch with a consolidation loan lender. This lender will answer any questions you may have concerning consolidation loans, and they will search the market to find the best consolidation loan deal for you.

CLICK HERE TO APPLY FOR A CONSOLIDATION LOAN TODAY!

How to Save Money with a Debt Consolidation Loan

2007-08-19T23:00:00Z

Consolidation loans are for people who are heavily burdened with debt in the form of high interest personal loans, credit card debt, school loan debt, etc. With a consolidation loan, all of these high interest debts are payed in full, so the only remaining payment to be made each month is the consolidation loan itself. Most often, consolidation loans carry a much smaller interest rate than other, more common types of debt. In addition to providing quick debt relief, a debt consolidation loan is able to save many borrowers a good deal of money. Following is a list of ways to save money with a debt consolidation loan.

Select a debt consolidation loan that charges a low rate. Having a lower interest rate means you can save money off your monthly repayments on the debt consolidation loan since your interest payments will be much lower. To find a loan with a low interest rate, be sure to shop around with a bunch of different lenders until you find the one that's got the best rate for you.
Commit to a fixed term loan. This can save you money because it will not allow your interest rate to increase if the base rate does.
You can keep saving money with a consolidation loan if you get an unsecured consolidation loan because you will have to pay a lower debt consolidation rate.
Cancel lines of credit and credit cards while you are paying for your consolidation loan. This is a form of self-discipline because paying for your consolidation loan is like paying for your individual debts as well. If you cancel potential sources of debt, you reduce the pressure on yourself to pay for additional or future debts.
Consolidate your credit card debts first before your other debts because usually credit card debt carries a higher interest rate than other forms of debt.
You will find it easier to start saving money with a consolidation loan if your credit score is satisfactory. People with poor credit ratings or negative credit history will have a harder time securing a consolidation loan with cheaper payment terms, compared to someone with a positive credit rating.
If you have excess assets in your name, such as a second home, you can put this up as security for a secured form of a consolidation loan. This is very helpful for saving money with a consolidation loan because a secured consolidation loan will carry a lower interest rate than an unsecured consolidation loan. Just be sure you keep up with the payments so your security is not sold off by the lender if you default on payments.
Practice sound financial management habits when you have a consolidation loan. Some people are tempted to spend any potential savings from the consolidation loan, but you must clamp down on unnecessary spending so that you will be adding to your savings regularly, not deducting from them.
Make sure that the consolidation loan you applied for will guarantee that previous creditors will stop requesting interest charges, late fees, and over-limit charges to your multiple debts. There are debt settlement companies that will pay for past debts but not for additional charges such as these which means that after the payment period of the consolidation loan is over, you will still have to pay for the additional charges you incurred with those multiple creditors.
Do not be deluded by debt consolidation companies that claim to be non-profits. Many such debt consolidation companies actually charge you high up-front fees anyway, and this will prevet you from actually saving much money with a consolidation loan.
Once you have signed up for a consolidation loan, keep up with payments. This will assure that you get out of debt sooner, and it will prevent you from being sued. Yes, it is possible that you will be liable for lawsuits filed by your creditors, but it becomes less likely if you have initiated the consolidation loan process already. A lawsuit is expensive both for you and your creditors, so try to avoid lawsuits when you can.
Take advantage of free debt consolidation advice offered by reputable debt relief companies. You will be able to learn how to go about saving money with a consolidation loan without having to pay fees that other consolidation loan counselors charge. The free advice may involve the suggestion that you take out a consolidation loan from the same company that gave the advice, but if their advice is good, then maybe their consolidation loan will also be legit. Take the time to examine their offer carefully.
Learn as much as you can about the consolidation loans that are on the market. This way, you can learn more about saving money with a consolidation loan before you go to a lender to proceed with the process of taking out a consolidation loan.

Saving money with a consolidation loan is easier if you make an informed choice. Study your options carefully, and get a second opinion if necessary.

If you're interested in finding the best consolidation loan for you, take just a moment to fill out this simple questionnaire, and one of SimplyFinance's representatives will contact you shortly to introduce you to a consolidation loan lender. This lender will answer all of your loan questions before finding you the best consolidation loan deal available.

CLICK HERE TO APPLY FOR A CONSOLIDATION LOAN TODAY!