Shopping For a Debt Consolidation Loan
Many Americans find themselves faced with bad credit from debts and wondering if they should consider a bad credit debt consolidation loan as an alternative. Debt consolidation loans are designed to bundle all of your debts into one single, monthly bill. This lets you not only be more organized in your finances but also helps you pay back the debt in a faster, easier way. Benefits of Debt Consolidation Loans
Debt consolidation loans provide you a bit of mental comfort, you will see only one bill every month instead of however many you were seeing before. This alone will help you feel more organized and on top of your finances. But this is not just a feeling; debt consolidation loans actually do help your finances, and do keep you more organized. By combining all of your debts into one single loan, you have eliminated paying various interest rates on, let's say, four or five credit cards and a car loan, you now only pay a set interest rate on one loan.
Despite having bad credit, you can still be eligible for a debt consolidation loan. First, you need to figure out how much debt you actually have. Tally up your credit cards and any car payments that you make. Let's say you owe: $3,500 on one credit card at 15% interest, $2,000 on a second credit card at 17% interest and $1,500 on a third credit card at 16% interest, plus a car loan of $20,000 at 8% interest. This totals to $27,000 in debt at various interest rates. By using a debt consolidation loan, you will pay only one interest rate to pay all of this money back; this can save you thousands of dollars in interest payments.
Once you have an accurate figure of how much money you owe, you can start shopping for a debt consolidation loan. Keep in mind that the loan's rate of interest is one of the most important factors in deciding how to consolidate your debt: the lower the interest rate, the better the consolidation loan. After you have settled on a debt consolidation loan you will find out how much you should pay each month to maximize the efficiency of the loan and pay it all off as quickly as possible.
You may find yourself with extra money each month as a result of consolidating your debt, but do not be fooled. This extra money should go straight to paying off the debt consolidation loan and not towards purchasing things and acquiring new debt. It is important that you are strict with yourself in making it a priority to pay off your debt consolidation loan as quickly as possible. Even though you are paying a lot less in interest than before, you are still paying interest on the debt consolidation loan and it is in your best interest to pay it off and revive your credit record.