High interest rates on credit cards are becoming a serious problems. When the economy goes bad, credit card companies do more detailed regular credit checks on their customers, and at the first sign of trouble they will often raise the interest rates without warning.
That’s a big shock: everything was going well, and you were managing to meet your payments at 11% interest, and then all of a sudden the interest rate jumps to 22%, and you can’t even afford the minimum payments. What should you do?
First, talk to your credit card company. Perhaps they will agree to lower your interest rate, or convert your card into a loan with fixed terms of repayment, at a lower interest rate.
Second, talk to your bank about getting a debt consolidation loan. Use our free debt consolidation loan calculator to determine how much you can save.
Finally, if that doesn’t work, you may need to consider a consumer proposal as a way to consolidate your debts. You have options, so review your options now to keep your interest rates low.
A debt consolidation loan is a great way to reduce your costs of borrowing. If you can arrange a line of credit or loan at the bank at a low interest rate, and use that money to repay your high interest credit cards, a debt consolidation loan is a great way to save on the interest you are paying, and help you get out of debt faster.
In most cases the cheapest possible interest rate is on a secured loan, such as a mortgage. The bank or mortgage lender knows that if you don’t pay they can take your house. They are “secured”, so they have less risk, so they are willing to give you a cheaper interest rate.
Beware! By getting a secured loan, you have now put a charge against your house. If you don’t make your loan payments, you will lose your house! A secured loan is a great way to reduce your interest costs, but only get a secured loan if you are absolutely certain that you will be able to make all required payments.
Yes, it is possible to become debt free. A debt consolidation loan is one way to repay your debts over a period of time. But there are other options.
This debt consolidation loans information site was created to provide information about debt consolidation loans, and other alternatives for dealing with debt. That’s why we include a free debt consolidation loan calculator. Every day our editors receive e-mails and comments with suggestions. We research all of them, and we constantly keep our eyes open for new and better ways to deal with debts.
During our research we discovered the remarkable story of Clint Holland.
He discovered that it is possible to become debt free without filing for bankruptcy, or sneaking out of paying your bills, or living on macaroni and cheese for the next 5 years, or doing anything illegal or immoral. Here is a remarkable story:
My name is Clint Holland and the first thing you should know about me is I am not a credit expert or some kind of financial egghead. I’m just an ordinary, average guy that ended up deep in $213,000 of debt and found a 100% guaranteed and proven way to get out faster than any method currently taught. Plus, it works regardless of where you live and is not dependent upon your income. Not long ago …
I was scared I was going to lose one of my cars or my home. Things were tight and times were tough money wise. The pressure was eating away at my health and it took its toll on my family. I was convinced I had to do something to get this monkey off our back. As you can imagine …
I was buying all sorts of books and courses that promised me a way to get out of debt, but most of it was junk or stuff that was too hard to do. Some of it was good. Anyways, I ended up stumbling upon a ridiculously simple technique one day that came from a military strategy concept – and so I tried it on my mountain of debt. Guess what?
It worked!
I know this sounds crazy, but with your permission I’ll prove it’s 100% true. It’s so true that I became free from that terrible $213,000 mountain of debt in just 5 years! And let me tell you, life is good now. No more creditors calling me or mailing me nasty letters to pay my bills. Plus, I have more spending money to do what I want, when I want. And you know what?
I didn’t go out and get a second job or increase my income to do it. I didn’t even get a loan or any other such nonsense you’re commonly told to do.
And yet, my system is guaranteed to make you 100% debt free faster than anything on the market. That includes your mortgage, credit card, automobiles – whatever!
The entire world is in a recession. The credit crisis of 2008 has led to reduced credit in 2009, and on into 2010. Banks lost money, so now they don’t want to make any new debt consolidation loans unless the borrower has perfect credit. Of course if you had perfect credit, you would not need a debt consolidation loan!
Is it possible to get a consolidation loan in these difficult times? Yes, it is, but you need to be smart and work a little extra hard.
First, be prepared. Before you go to the bank, get copies of last year’s tax return, recent pay stubs, and statements from all of the credit cards and other debts you want to consolidate.
Next, check your credit report to make sure it’s correct. If there are errors, get them corrected before you apply for your loan.
Third, ask your friends where they have recently obtained loans. They may be able to refer you to a specific loan officer who will be easier to deal with.
By taking these simple steps you are more likely to be successful. If you don’t get the loan, ask what you need to qualify again in the future. Perhaps if your income is a bit higher, or if you have a co-signer, you are more likely to qualify.
In today’s difficult economy, it is harder than ever to qualify for a debt consolidation loan. To get a loan you must have sufficient income, and perhaps collateral. In many cases the lender will also ask you to have a co-signer.
A co-signer is someone with good credit who guarantees your loan. If you don’t pay the loan, your co-signer is liable. That means if you don’t pay, the co-signer is on the hook!
If a bank or other lender asks you to get a co-signer as a condition of giving you the loan, what should you do? Should you ask a friend or a family member to co-sign for you? If you lose your job and can’t repay the loan, and if the co-signer has to pay, how much damage will you do to your co-signer? In most cases it is not worth losing a friend by asking them to co-sign your loan. In most cases it is not worth putting your parents’ financial future at risk by asking them to co-sign your debt consolidation loan.
If you can’t qualify for the loan without a co-signer, your best option may be to say no to the loan. Look for other alternatives, such as credit counseling, a Chapter 13 Wage Earner Plan (for Americans) or a consumer proposal (for Canadians). If you can’t qualify for a debt consolidation loan without a co-signer, you should be looking for other alternatives. Don’t drag someone else down with you.
The credit crisis of 2008 has lead to the economic collapse of 2009, and there is no doubt that it is now much more difficult to qualify for a debt consolidation loan than it has been at any time in the last ten years. There are many reasons for this.
Second, your ability to qualify for a debt consolidation loan is based on your income. If you have been downsized or laid off, your income is lower, so qualifying for a debt consolidation loan is now more difficult.
So, what can you do?
You may need a co-signer to get a loan. You may need to settle for a lesser loan than what you would otherwise expect.
If you are a senior with substantial equity remaining in your house, you may qualify for a reverse mortgage.
If those options don’t work, you will have to make a personal budget and keep your expenses as low as possible to repay your debts on your own.
During a recesssion, cutting your expenses is critical to avoid bankruptcy, so get started now.
A debt consolidation loan is an excellent strategy to use to convert high interest payments on credit cards into one lower interest payment. But what can you do if the bank says no? Here are some debt consolidation loan options:
First, you could attempt to become debt free on your own, so you don’t need a debt consolidation loan.
If you are paying very high interest rates on your debts, a debt consolidation loan may be a better option for you than bankruptcy. If you declare personal bankruptcy, there will be a note on your credit report for many years, which may make it more difficult to borrow in the future. With a debt consolidation loan, you may be able to consolidate your high interest loans, like credit cards, into a lower interest consolidation loan, so that more of your monthly payments go to pay off your loan, so you get out of debt faster.
What can you do it you don’t qualify for a debt consolidation loan? Read our special report on How to Get Out of Debt Fast Without Filing Bankruptcy for more practical tips to get out of debt and avoid bankruptcy.
When you consolidate your debts, you borrow money to pay them so that you no longer owe to multiple creditors, but only to one. If you are finding your debt payments confusing because they all have different due dates and interest rates, then consolidating them may be a good way to help your finances become more manageable.
Debt consolidation loans are received from financial institutions. Typically to get one, they require you to be working or have some source of income and so you should bring in your most recent pay stub and last year’s tax return. The bank will also want to see a copy of your monthly budget to determine if you will be able to make your payments after you have covered your basic needs given your income. Finally, in some cases they may ask you to have a co-signor or collateral attached to your loan but this will depend on the institution.
If your debts have very high interest rates and you are able to qualify for a lower interest rate on the consolidation loan, then it may be the best option for you. Having only one monthly payment to give makes paying for your debt more manageable helping you to avoid late fees, extra charges and bad credit that would result if you could not afford the regular bills.
Although debt consolidation sounds good, it is not for everyone. First, you must ensure that the interest rate on your new loan is actually lower than on your old debts or else your will actually end up being charged more and consolidation really does not make financial sense. Similarly, if you take longer to pay off the debt when you consolidate, you could end up gathering more interest and therefore not be saving any money at all. Debt consolidation does not actually reduce how much you owe; it just makes paying it off easier. Do not let any financial institution trick you into signing for a loan that does not make sense. Make sure you read over all documents carefully and ask questions to ensure you understand the implications of your decision.
The only way to know if debt consolidation is for you is to sit down and crunch some numbers. When you are investigating financial institutions, you should compare at least two. Different banks will charge various interest rates and will have their own requirements to get their loans. If you need help, contact a financial professional who can help you do the math and figure out whether consolidation makes sense for you to get out of debt.
In the United States, federal student loans are guaranteed by the U.S. government. To consolidate a student loan that is guaranteed by the federal government, your loan is purchased by a loan consolidation company, or by the Department of Education. The interest rate will depend on market rates up to the end of May of each year, so they may change over time.
It is also possible for former students to get a student loan consolidation loan from a bank or other lender, provided you have good credit, and the ability to repay the loan.
If you have good credit, talk to different lenders to determine the best interest rate. If you already have the best interest rate, there is no need to consolidate. As with all debt consolidation loans, your goal should be to repay the loan as fast as possible.