Getting your finances together doesn’t have to be hard. If you have the right information, you can get things done in a way that might surprise you. If you have never heard of debt consolidation, this article is going to give you a ton of information about it. Keep reading!
Have a clear payoff goal in mind. Rushing to get the lowest interest rate is not the best and only way to pay off your debts quickly. Consider how you can pay off your monthly debts in approximately 3 to 5 years. This helps you get out of debt and raises your credit score.
Seek the consult of a consolidation service. Talking to a credible company about your debt can help you establish where you stand. They may help you realize that your situation is not as bad as you expected. You may also find that the debt is larger than you care to deal with alone, which may prompt you to move forward with the service.
To consolidate your debt, try taking out a personal or signature loan. This has become a limited option due to the credit crunch, however. Many lenders that used to offer unsecured, signature loans for consolidation do not anymore. If you find one that offers this option, be sure it’s not a high-interest loan, even if it helps you lower monthly payments by extending the terms.
Know if you are merely getting an official budget. If you sign up with a debt consolidation plan, you might be set up with a budget, so you know how much you will have to pay each month towards all of your bills. If that’s what you’re expecting, proceed, but know that some other debt consolidation companies offer you a loan instead.
Know what your position is on collateral before applying for a debt consolidation loan. If you don’t have collateral of sufficient worth, the terms for your loan will not be as favorable. Without sacrificing your home, tally up your assets until you reach a number that satisfies the criteria for collateral and take it from there.
Find out whether your creditors will accept lower rates through debt consolidation. It’s not a great idea to think you’re all set with debt consolidation and discover that the main creditors which caused you to do this will not accept the terms. Ask the debt consolidation company and the creditor to make sure.
After you’ve consolidated your debt, consider what credit cards you don’t need. Remember what got you here in the first place. Do you need all of that credit? Do you feel the itch to use it? Don’t fall back into bad habits. Get rid of any cards that are unnecessary.
Find out whether a company pays its counselors by commission. This is tremendously important for you, since a counselor working on commission may not have your best interests at heart. Make sure you avoid commission-paying companies, and instead opt for those that treat their employees well and pay them a salary.
You should only use debt consolidation if you plan to put the maximum amount possible down on your debts every month. Yes, your overall monthly expenditures will go down, but that should only remedy the negative balance you have every month. Otherwise, use any extra money to put back into paying off your debt.
Now that you have some idea of what debt consolidation is all about, start getting involved. You don’t have to take years and years to pay each bill individually, you can just consolidate your debts. Use the information here to help you make smart decisions about your debt consolidation, so that you can make better decisions in your life.