Debt Consolidation Loans
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In the present uncertain economic times, millions of people in the United States are buried deep under the heavy debts with many turning to debt consolidation loans. These debts range from credit card debt, personal loans, mortgages, car loans, student loans, and more. It is quite easy for any person to get into debts within a short time. With economy still in doldrums, there is scarcity of jobs everywhere, and people are unable to meet their household expenses, and often raise loans to meet their expenses. In most of the cases, they ultimately get into debt.
Aside from this, excessive use of different types of credit cards and their easy availability in the past has also contributed to the debt problem in the US. People also take personal loans at the drop of hat and end up getting several loans, which they find difficult to pay back. If you have secured these types of loans, and are feeling that it is impossible for you to make monthly payments, you can opt for debt consolidation loans to get out of this mess.
Debt consolidation loans allow you to consolidate your multiple high interest loans into one single consolidation loan at low rate of interest. Aside from low interest rate, this credit card consolidation loan also has a longer repayment term, which helps in bringing down your monthly installment. You save sufficient money to take care of your household expenses. Instead of running around every month making multiple payments, you only pay one single installment for a fixed duration (10-25 years) and once this term is over, you can become completely debt free.
All those who pay multiple debts often miss some of their payments and have to pay hefty penalty charges for this. This can add to their burden of high interest rate, which they are already paying.
Different types of consolidation loans that are available to you in the US:
Secured debt consolidation loan – This type of loan is best for all those who have some property or other valuable item, which they can offer as collateral to the lender. If you can offer a collateral, you can consolidate debt at much lower rate of interest. Best of all, you get your consolidation loan for a much longer term (10-30 years). However, you should opt for this loan only when you are sure of your repayment capacity, because otherwise there are chances of losing your house or other valuable items that you have offered as collateral to the lender.
Unsecured Debt Consolidation Loans – If you cannot offer any collateral to the lender, then this type of credit card consolidation loan is best for you. These loans are available at slightly higher rate of interest, and often have shorter repayment term. Several credit unions and banks also offer debt consolidation loans. Information on these loans is available online and you can research on your options and choose the best amongst them.
Home equity loans for debt consolidation -These type of loans allow you to use equity in your house for securing a consolidation loan from the lender. However, you will get approved for this loan only when you have high credit rating and considerable equity in your house. Even though, these consolidation loans have slightly tough conditions that you need to meet for getting approved, but they also have very low interest rate. However, any default in your monthly payments can lead to foreclosure, so you should choose this option only if you have a stable source of income.
Bad credit debt consolidation loans – You can opt for bad credit debt consolidation loans if you have a poor credit score and cannot secure a consolidation loan from traditional lenders. There are many lenders on the market who provide these type of loans and some of them even have online application process. If you are interested in this type of loan, you can seek few quotes and choose the best possible deal on the market. This is best option if you want to consolidate credit card debt, as their interest rate is quite low as compared to the credit card debt.
Eligibility condition for consolidation loans
You should be at least 18 years of age, and should be a US citizen. Aside from this, you should have a valid address, and a US checking account. You should be in a stable job or profession because this is really important to quality for this loan. Lender may ask you for paystubs or income proof for the past few months. In any case, your monthly income should be sufficient to support your household expenses, rent/mortgages, insurance and your monthly payment for credit card consolidation loan. A co-signer can significantly increase your chances of getting approved for this loan.
Most of the lender have their own requirements for monthly salary in order to qualify for this loan, and it varies from state to state. Similarly, interest rates also differ according to the state you are residing in, but in any case, it can be in the range of 12-15 percent depending upon the debt.
When you are searching for consolidation loans, you should opt for lenders who offer low interest rates and favorable terms, because this will help you in consolidating your debts in an easy way.
In some cases, your interest rate may also depend upon your credit history. If you are in this mess for the first time, then you can get approved easily, but if you have been through bankruptcy, or have consolidated several time, then you may not get low rates.
Debt Consolidation Loan Comparison Service
Many websites also offer loan comparison service for different consolidation loans available on the US market. These online calculators are quite easy to operate and you have to provide only few details such as the required loan amount, repayment period, interest rate, and within seconds you will know the monthly installment that you will have to make.
Lastly, it is best to seek expert advice from a reputable debt management company as they know about all debt consolidation products on the market, and can suggest you the best product depending upon your financial circumstances.