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- Published on Thursday, 10 September 2015 09:38
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Dealing with multiple debts can be extremely stressful and emotionally taxing, so if you are late on payments and you aren’t sure what to do, then you should read about debt consolidation loans and the lenders who are offering them so that you will be able to make an informed choice. Read reviews here - http://www.toptenreviews.com/money/debt/best-debt-consolidation-companies/.
Why take a consolidation loan?
If you are unable to make payments on time or you forget when each deadline is, then it would be a logical choice to go for one of these debt consolidation loans. You can get a loan to pay off your existing debts and make it easier to repay this new one. You can get rid of the high credit card balances and the inherent high interest rates while also stretching the loan over a longer period of time. So, in effect, you get to lower the interest rate as well as the monthly payment to get by these financial troubles.
Who offers these loans?
So you might be willing to apply for one of the debt consolidation loans, but who offers them? There are quite a few types of lenders from the specialized ones to banks, credit unions as well as peer to peer lenders and payday lenders. Specialized lenders will not accept deposits and, instead, they will take care of your other debts and pay them off for you. They will then send you a monthly bill that will make it easier to keep track of as well. These specialized lenders do not require a credit score as high as banks but their interest rate might be a bit higher.
Banks can offer both secured and unsecured loans, but they generally have higher eligibility standards including better credit scores. The people with the lowest acceptable credit score get an interest rate of about 13 percent while those with good score can expect to pay less than 9 percent. You also get to repay the loan over an extended period of time, such as 60 months, which can help stretch the loan as well as lower the monthly payments.
Credit unions offer debt consolidation loans for members and you could get quite good interest rates if you are a member of one of the big ones such as Western Federal Credit Union. You may also get up to 50,000 dollars but, for that, you will need an excellent credit score. Payday lenders are also a choice only that the rates can be extremely high and the repayment window short. You do get cash immediately to solve your problems, but this is not recommended unless it is the last resort. There are also peer to peer lender services, which could facilitate unsecure loans between various individuals.
Depending on your credit score, the amount of money you want to borrow and other aspects, such as the length of the loan and the interest rate, you might want to go with one type of lender or with another. So choose the right debt consolidation loans for your needs and pay off your other debts as soon as possible.