If you are searching on the internet for the best debt consolidation loans for bad credit or want to get information about the pros and cons of debt consolidation. What are instant debt consolidation loans. Is debt consolidation a good idea we will also teach you a few debt consolidation examples and also explain what consolidate credit card debt & credit card consolidation are and what is the difference? So for all this expansive information, you should read this post completely. So that you can get good and accurate information because half incomplete knowledge is very dangerous.
Debt Consolidation – best debt consolidation loans for bad credit
Should I Get A Consolidation Loan | Is debt consolidation a good idea?
The ideal scenario for someone with debt is to get a low-rate consolidation loan
and pay it off in three or four years. But that’s easier said than done. True
consolidation loans are usually unsecured personal loans (we’ll talk about other
types of consolidation loans in a moment). The problem is that lenders know that
if you already have quite a bit of debt and then consolidate, you’re likely to end
up deeper in debt in a year or two.
Remember our five types of borrowers:
- Wishers
- Wasters
- Wanters
- Whiners
- Winners
Wishers, wasters, wanters, and whiners are all at risk when it comes to
consolidation loans. They will often:
- Get a consolidation loan based solely on the monthly payment. Once
they’ve consolidated, they figure they’ll be able to quickly pay it off but
have no specific plan for doing so.
- Soon run up new debt. After all, they still need a new car, clothing, the
latest cell phone, etc.
- Be at risk for high-rate consolidation loans because they are focused just on
today’s situation and not on a big picture plan for getting out of debt.
- Complain about their situation but never try to take steps to remedy it.
- For winners, though, a consolidation loan is just a way to lower costs in
order to get out of debt faster. They’ll take a consolidation loan if it makes
sense, but they won’t fall for gimmicks like high-rate loans.
Lenders know that there are a lot of wishers, wanters, wasters, and whiners out there. That’s how they make money. They also know that puts their loans at
risk, especially since they don’t have any collateral to go after if you don’t pay.
That makes a consolidation loan hard to get if you already have quite a bit of
credit card debt. You can shop for a consolidation loan, but what you’re more
like to find are offers to tap the equity in your home (where lenders at least can
foreclose if they really have to), offers for credit counseling and debt settlement
(which we’ll talk about in the next chapter).
Peer to Peer (P2P) Loans
If your credit card company is charging you a high rate and won’t budge, you
may want to check out a peer-to-peer lending service (also called “social
lending” service). Although the premise is similar to that of a bank (take in
money and then lend out that money at a higher rate), these services aren’t
banks. Instead, they allow individuals to lend money to other individuals in the
hopes of earning higher returns on their investments. The two most popular
services in this space are Prosper.com and LendingClub.com.
You don’t have to have perfect credit to get a P2P loan, but you typically
must have a decent credit score. Their minimum credit score requirements are
posted on their websites. The interest rate you will pay will depend on the level
of risk the lenders think they are taking by lending you money. The better your
credit qualifications, the lower the rate you’ll pay.
In addition to potentially lower interest rates and (possibly) easier credit
standards, there’s another advantage to these loans over credit cards. These loans
must be paid back over a specific number of months, so you won’t be stretching
out the debt over many years. And they will be reported as installment loans, not
revolving loans, which may also be helpful for your credit scores.
FAQ
Does debt consolidation affect your credit score?
Conclusion
The conclusion of this post is that you should carefully examine and then take the loan of debt consolidation. so that this loan can benefit you later and not put pressure on you.
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