Debt Consolidation Rates
In recent years, consumers have accrued more debt than they had in all prior history. Many of these individuals also borrowed on credit cards and other loan sources that came with very high rates of interest. Needless to say, this does not place and individual in a good position financially. This is where debt consolidation loans come into play. Now, most people realize paying one payment per month as opposed to several has many benefits. But, there is more to debt consolidation than that. Namely, acquiring a debt consolidation loan at a low interest rate will get you out of debt rather quickly.
The rate of the consolidation is the most important factor to be considered when contemplating a bad credit debt consolidation. Borrower’s credit history, present economic condition, market condition, and lending rates are some of the factors that determine bad credit debt consolidation rates. Debt consolidation rates can be variable or fixed. Variable bad credit debt consolidation rates change with the nature of loans. In the case of fixed rates, bad credit debt consolidation has a fixed rate of interest all through the term of the loan.
A couple of factors influence the rates of which you would be charged. The first is your credit history; if you’ve got a clean slate then you wouldn’t have a problem but if your credit history is bad, chances are that you would be charged a higher interest. Therefore, it would help a lot to invest in a company that charges less.
So how could you get the best debt consolidation rates if you cannot borrow money to help you consolidate?
The answer is not to try and borrow money in the first place. There are several consolidation companies that can help you with a debt management plan even if you have bad credit and they won’t lend you a dime. They can still help you reduce or eliminate your high APRs, consolidate your monthly credit card bills into one simple monthly payment, reduce and eliminate over the limit fees and late fees, and stop debt collection calls during the morning and at dinnertime.
You can still take advantage of these services without taking out a new loan. Because let’s face it your history of managing credit and unsecured loans has not been that great. But this, those problems may not have been totally your fault due to an unexpected job loss or unexpected medical bill.
When you begin your search for the right debt settlement loan for your purposes, make it a point to compare interest rates as well as other services that are offered by the company that you plan to work with and borrow from.
You are quite likely getting offers for loans every day in your email and other advertising methods. The odds are that you are seeing more than five or ten a day. This may well be the answer to your credit problems if you can use some restraint and not jump at the first offer that presents itself to you.
What does a debt consolidation service do and is it right for me and my level of debt?
A consolidation service works by taking multiple companies in which you are in debt too, they will pay off these companies and transfer the total paid off debt to their company to be paid off over a coarse of months in which is affordable for you. This saves you from having to pay multiple bills a month which may add up to more than you can afford, while also saving you from service and extra fees which may all be building onto of each other. Thus you have a lower monthly bill to pay every month, the companies are no longer bothering you for money, and you have more extra money every month to live by and take care of your family.
How much can I reduce my rates?
This depends upon which company you are working with and how much you owe. Most of the time, you will be able to knock down your interest rates as much as 50%. This means that if you have been paying 30% on some crazy credit card, you will get a nice consolidation loan that is no more than 15%. Imagine what this can do for you and think about just how much money you are going to be putting towards the principal of your loan. You will start to see the total amount owed come down much more quickly and this will keep you from running up a huge bill over time.
Banks and credit unions are the best places to go for the lowest possible interest rates. You should understand that it is not just your credit score that they consider when determining how much you qualify for. You should understand how collateral works, and what the various options are. By knowing what to ask for, you will be able to find a solution that suites your needs.
There is one more point which needs to be noted. Since you have the loan due on your account in more than one credit account, hence you must be paying higher interest rates. Suppose you are able to consolidate all the loans into one account, then this means that there will be one principal amount and one interest rate. If you know even a little bit of compound interest then you will definitely come to know that in this case you will definitely have to pay the lower interest rates.
This is definitely great news. These kinds of companies do provide the loan for longer period of time. The longer period of time does mean that you will have to pay less money in each installment. Thus in this way you will be able to lower down the interest rates quite effectively.