An Overview of Student Loan Debt Consolidation
A student loan debt consolidation loan allows you to combine
your federal student loans into a single loan with one monthly
payment. The repayments of a student loan debt consolidation
loan can be significantly lower than the payment required...
Debt And Bill Consolidation And Its Two Faces
Debt or bill consolidation is one of the latest methods available by companies to take control of your debts. Debt or bill consolidation is also known nowadays as either debt settlement or debt negotiation. The process behind debt or bill...
Debt Consolidation – Discipline is Required if Consolidating with Home Equity
Debt consolidation is a popular topic these days. The average American carries nearly $10,000 in credit card debt and credit card debt of $100,000 is not all that unusual. New legislation that takes effect in October 2005 is going to make it harder...
Debt consolidation loan as a way out of debt
A debt consolidation loan is a single loan you can take out to cover the rest of your loans. A debt consolidation loan can offer a lower monthly loan repayment amount and less in interest payments. Therefore this type of loan is suitable over your...
Types Of Services Debt Consolidation Companies Offers
Bills: the word does really strike a chord in one’s heart, doesn’t it? It may remind you of pesky calls from creditors, notices of disconnection and politely worded warnings of legal procedures…and though you may dearly want to pay them all off, the...
|Do you need a debt consolidation loan?
If you are in financial difficulties due to debt or have built
up a variety of debts over time, a debt consolidation loan may
be for you. But before you take that route, you should consider
all the options.
However you got into debt - unexpected financial difficulties,
illness, loss of providing member of the family or overspending
- you can turn to several organizations and charities for
advice. These include the Citizen's Advice Bureaux, the Consumer
Credit Counselling service, the Community Legal Service (England
and Wales) or call the National Debtline on 0808 808 4000.
Remember debt consolidation is one option and you should not
feel pressured into taking it. These organizations can help you
consider the alternatives.
Your own lenders can also be surprisingly sympathetic about
restructuring repayments. Talk to them as well.
Having said that, many borrowers can benefit from consolidating
their debts on better interest rate terms. Some credit cards
cost up to 17.9 % (e.g. MBNA) and store cards can cost more.
Consolidating your debt could cut interest payments by up to two
It may be more convenient to make one payment rather than
several. Or you can improve your cash flow in the short term by
reducing monthly outgoings. But this may cost you more over time
because you are paying the debt off over a longer period of time.
Be careful if you are borrowing larger sums of money (over £
25000) as your loan is likely to be secured as a second mortgage
rather than an unsecured personal loan. Many adverts make it
sound like debt consolidation will solve your financial
problems. But taking out a secured loan means you are gambling
your house that you can repay the debts. You need to be sure of
your ability to repay before doing this.
Most people simply want to consolidate
unsecured personal debts,
overdrafts or credit cards. Taking out a second mortgage to do
this could mean you lose your home if you fail to pay the debt
even though you keep up the payments on your first mortgage. You
should also consider insuring this kind of loan, although not
necessarily with the lending company. You may find a cheaper
Make sure you deal with the causes of your debt as well as
restructuring your credit. There is little point in taking out a
debt consolidation loan if you continue to live beyond your
means. If you don't exercise financial discipline you run the
risk of getting into the same trouble again in two or three
Before taking out a loan, think about how much you can afford
to repay per month. You need to know -
- what the APR is - whether it is variable - what the overall
cost of the loan is - if the rate of repayment can change for
other reasons - what happens if you miss a payment - what
happens if you repay early or refinance - if you have secured
the loan on your home, what are the consequences of defaulting -
what happens if you decide to move house
Things to be wary of are -
- firms which specialize in debt consolidation; they generally
cost more in interest and fees - claims to improve credit
records; only you can do this and it takes time - offers to lend
extra money, for example, to buy a car; extra debt puts your
home at further risk
Finally, shop around for the best credit and payment protection
deals. You do not have to get them from the same company and you
may not get the best deal if you do.
About the author:
Working in site design, structuring and content for over 3 years
and currently writing for Creditmarket.co.uk