Why Not Consolidate Your Loans or Other Debt?
What Types of Loans Can You Consolidate?
For more information or exciting opportunities!
It Is Much Easier to Make Fewer Monthly Payments
Pay Off Your Loans and Debts Much More Quickly
Typically, you can get a much lower interest rate on a consolidation loan than the
percentages you are paying on most of your credit cards. Credit cards can run 16% to 28%
interest, depending upon your credit history and credit score. In addition, the U.S. Congress
has authorized an increase in the minimum monthly payment you are required to pay. The
new minimum monthly credit card payment will be about 4%, up from 2%. This will
obviously raise your minimum monthly payment amount. Remember, you should only
consolidate if the interest rate on your consolidation loan is lower than the interest rate on
the loans you are consolidating.
When you have many credit card and other payments, it is inconvenient and time
consuming to have to make so many individual payments. To top it off, it is much easier to
accidentally miss a payment, making your credit even worse. This will drive your loan and
credit card payments even higher and make your life more difficult. You have a much easier
situation if you have only one loan payment to worry about.
Because your monthly interest payments are so much lower, you can pay off your loans,
debts and credits cards much more quickly. This can save you substantial interest
payments over the long term. Be careful though, if you stretch out a debt consolidation loan
too long, you could end up pay substantial interest. Even though the interest rate is much
lower, you have the ability to stretch out the repayment for a longer term.
|Lower Monthly Payments|
|More Convenient Life|
|Repay Your Loans Much More Quickly|
|You May Be Able to Avoid Bankruptcy|
|You May Be Able to End Creditor Phone Calls|
|You Could Realize Substantial Tax Savings With a Consolidation Loan|
|You can often avoid late fees on loans and credit cards|
Substantially Lower Your Total Monthly Loan Payments
LOAN AND DEBT
Debt consolidation loans are basically just home equity loans. Your home is the collateral for
the loan. It is a second mortgage on your primary home. If you fail to repay the loan, your
home will be foreclosed upon. You need to be very sure, if you do decide to use a debt
consolidation loan, that the circumstances or spending habits that caused your present
situation are under control. If not, you will get the debt consolidation loan, pay off your debts
and credit cards, but soon be right back where you started. The difference is you now have
little equity in your home to get you out of trouble.
You Can Lose Your Home
If You Don't Have a Home or Other Excellent Collateral, You May Not Be
Able To Get a Consolidation Loan
Most lenders are not going to give you an unsecured loan if your credit score is not excellent. If
you have great credit, but just want to pay a lower interest rate and make one payment, you
may still be able to get a debt consolidation loan. If, however, your credit is less than perfect
and you have no collateral, you are probably a good candidate for a credit counseling service.
You May Be Able to Avoid Bankruptcy With a Consolidation Loan
If you think you are close to declaring bankruptcy because of too little cash flow, a
consolidation loan may be just what you need to free up extra cash each month to allow
you to meet your financial obligations.
You Can Consolidate Any Type of Loan or Debt.
The good news is that, because in most cases you are getting cash out of the equity in your
home, you can consolidate any type of loan or debt. The most popular types of debt to
consolidate are school or education loans and credit card debt.
School loans, such as Stafford or Plus loans are usually at very favorable interest rates. In
many cases, it may not be a good idea to consolidate them. These types of loans may be at an
interest rate that is equal to, or lower than, your consolidation loan rate. You could end up
paying more and risking your home to boot! You can, however, get programs specifically for
student loans that don't require you to risk your house. These programs set interest rates in
July, so if you're going to participate, you should make sure your loan application is complete
and filed well before July 1st.
This is an area where you need to evaluate your situation carefully. Consolidation may or may
not make sense. In any case, please remember to check on consolidating your school loan
before July 1st every year. That is the deadline after which you pay the rate for the next year.
Credit card debts are another situation entirely. Credit card debts are at much higher interest
rates than school loans. In this case a consolidation loan is a much wiser strategy. Many credit
cards have interest rates of 20 to 27 percent, especially if you have missed, or been late with
any payments. If you are in a situation where you have out of control credit card debt and it
seems to be getting worse every month, a consolidation loan could be just what you need to get
your head above water. You can pay off all your high interest credit card debts or other loans,
such as car loans, or revolving store accounts, and have a much lower monthly payment.
Paying Off Your Debts With a Consolidation Loan Can Stop Creditor Calls
If you dread those phone calls from creditors you can get relief with a consolidation loan .
By paying credit cards or other loans off, or bringing your financial obligations current, you
can end the constant stream of collection and creditor phone calls.
A Consolidation Loan Can Have Substantial Tax Benefits
In many cases, you may be able to deduct loan interest as expenses before paying income
tax. You will reduce your taxable income by the interest amount. In addition, this may also
put you into a lower tax bracket, further lowering your tax burden. You need to check with
a qualified tax professional to be sure.
A Consolidation Loan Can Help Eliminate Late Payment Fees
Since you are only making one payment, you chances of making late payments are reduced
considerably. This is one of the places people get behind on their payments. You are late
with a payment, so the credit card issuer adds a $39.95 late charge. Now you have an even
larger payment and a greater balance to deal with. By reducing the chance of late payments,
a consolidation loan can really help get your financial life under control.
Something else to consider is that many credit card companies have what's called a universal
default clause. The universal default clause states (in the very fine print) that if you are
more than 30 days late on a payment, they can invoke the clause and up your interest rate
to those in the terms of your credit card agreement (These can reach about 30%!). The
problem is that this clause looks at all your financial obligations. If you are more than 30
days late on your Nordstrom card, for example, your Visa card interest rate could go up.
Consolidate Your Debt -
Get Out of Debt &
Live a Better Life Now!
If You Don't Have a Large Amount of Unsecured, High Interest Debt,
You Could Actually Pay More in Total Interest With a Consolidation Loan
Because the term of most debt consolidation loans is so long, you could actually wind up
paying more in total interest even though the APR of the debt consolidation loan is much lower
than the credit cards you're paying off. This varies according to the interest rate you're paying
on your current debt, but if your total debt is fairly low, say one to two thousand dollars, and
you've stopped increasing your debt, you should probably just pay it off. The longer term
would deliver very low payments, however, you would probably be better served to get on a
regular payment plan that would eliminate this debt in less than two years.
|Become Debt Free & Start Today
If you're in debt, you should take a look at this simple program. 97% of the people who
- Simple, Highly Effective Strategy
- Very High Success Rate
- No Bankruptcy, You'll Fulfill Your Obligations!
- You'll use only the income you make now.
tried it got completely debt free in less than 5 years, no matter their level of debt.
Wouldn't it feel great to completely eliminate debt? Of course it would! You can start
living the life you want, you just have to take the right first step.
To try this program and get out of debt, go here: Eliminate Your Debt by Starting Today
Copyright 2005-8 OpportunitiesAplenty.com
All rights reserved.
Note: While we believe this information to be factual at the time of
publication, it is possible the information contains errors. This
information is presented for entertainment purposes only. The
publishers of this site are in no way responsible for the use or misuse of
any information contained herein, or any problems, difficulties, losses,
or concerns arising from its use.
|Your Debt and Credit Information Destination
Start Becoming Debt Free Today!
|Why Should You Consolidate Your Loans or Other Debt?