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Handy ideas about : How To Get A Good Debt Consolidation Loan Deal

  1. Debt consolidation is the process of combining small existing debts into a single large one. The idea is to get a lower rate overall, so if you have existing loans which are on a low rate, keep them as is, and only consolidate the expensive ones.


  2. Monthly Budget Planning. Budget planning is a priority for financial well being. Managing your finances without a proper plan is hard. It's also difficult to plan when your income and expenditure are roughly the same. However, it's possible to find out how you can easily pay your debt installments.


  3. Study Credit Reports. You have to verify a report and then try to understand debt consolidation. Get help from others and get the full picture.


  4. Do the calculations yourself. Don't just leave it to the lender. You decide which plan(s) suit your needs.


  5. Be aware that lenders attach higher interest rates to unsecured consolidation loans. They take a larger risk when they lend money without security and to compensate their interest rates will be higher.


  6. Always go in for lenders with good reputations in the market and lots of good client reviews. They should be in business for years and be capable of easily handling your case.




  7. You can get a considerably lower interest rate for your outstanding overall debt. You will also be able to remove unsecured debts or those that have very high monthly payments. Consolidating debts will also improve a bad credit rating as you will have paid a lot of of your outstanding debt.


  8. How much does a consolidation cost? How much you are going to pay will depend on the lender you have chosen. There are some who can offer you lower transaction costs. They can offer you free consultations. Others pay the closing costs on your behalf, provided that this will be covered by your eventual monthly repayments. There are also some who charge upfront all of the associated fees.


  9. Take advantage of 0% interest-rate credit cards. However, you have to be very careful. You will only be entitled to use this between six to fifteen months. Afterwards, you will begin incurring interest. Before that, if you miss a payment, you lose the deal and interest beings being charged, at 20% or more! So, it's dangerous. You also have to monitor related fees, like a 5% processing fee. That can be a lot of money. You need to calculate if it's worth proceeding with.


  10. Go for unsecured loans. This is useful for people who already have a bad credit rating or those who can't put up any collateral or equity. This is because in unsecured personal loans, you don't have to present anything except perhaps the bills that you want to be consolidated. Unsecuredl loans present a greater risk to the lender. There's an increased possibility that you won't be able to repay the debt. So, consolidations through this method can attract very high rates and terms for the repayment are shortened.


  11. Never spend more money than you earn. This is the most important debt-reduction strategy. Many people are not aware that they are spending more than they are earning. Make a detailed note of where your money is spent in a month. Then factor in yearly expenses, like car insurance. If your spending exceeds your income, then you know it's time to change.




  12. Limit your credit cards to two per family. Some families are daft enough to give their CHILDREN their own credit cards. This gives them the green light to spend more without thinking about how, and WHO, is actually going to pay for their purchases. Another tip is to contact the credit card lender and ask them to lower the interest rate(s). Many will do it and there's no harm in wheedling.


  13. Your creditors can harass you with daily telephone calls until they get their money back. There's no point in arguing with them. You're just talking to a telesales operative in a cubicle farm somewhere in India or Indiana. Each time they call you, or you call them, you'll be talking to a different person.


  14. Decent consolidation lenders can help you reduce your debt outgoings. They negotiate with your creditors on your behalf. You can get your consolidation and associated interest rates lowered quickly. They try to reduce your late and over-limit fees.


  15. Stop accruing new debt. Put your credit cards away, and refrain from taking out new loans or refinancing old ones to borrow more money.


  16. Write out a budget. You need to know where your money is going each month, and which areas you can cut back on to free up more money to pay off your outstanding debts. If you're not sure where your money is going, write down all of your expenses for a month and then set out your budget.


  17. Cut unnecessary items from your monthly budget and cut back anywhere else you can. Set this money aside to pay off your debts.


  18. Determine which debts are the most important and need to be paid off first. If you have secured debts, besides a mortgage, pay them off first. Debts with high interest or charges (like some credit cards) should also be high on your list of priorities.


  19. Pay the minimum money payment each month on all of your debts except the one that you have given highest priority; the one with the highest interest rate. Put all your extra money toward that debt, and continue to do so until it is paid off. If you get a pay bonus or windfall, consider putting it toward your debt as well.


  20. When you get one debt paid off, start putting your extra money toward the next one. Repeat until all of your debts are paid in full.


  21. One of the reasons people tend to be so cash-strapped is because they find it hard to keep track on their payment schedules. You have different due dates for different debts. However, with consolidation, you can combine most of them into one single loan, and you can start thinking about one solo payment. A smart idea would be, if you can't control your spending at all, is to close the accounts of all but your oldest credit card (for the credit history attached to it). This will stop you incurring any more debt.


  22. Worthwhile consolidation lenders can cut interest rates. Because the resulting loan is treated as a brand-new one, you can lower your interest rate and extend your payment term. This should give bigger savings every month. You can use the money saved to pay bills that are not covered by the new consolidation, or pay _more_ on your consolidation. This way, you will cut down the number of your payments and lower your interest.


  23. In the US, consolidations may entitle you to tax deductions. You should consult with a tax advisor about this. You want to avoid the attention of the Internal Revenue Service.


  24. You can get rid of harassing telephone calls. Debtors receive lots of warning calls from lenders. Thankfully, there are also many lenders that not only provide consolidations, but can also act as your representative to settle your debts with other finance lenderS.


  25. Beware of lenders that provide a solution that decreases your combined monthly payment but raises your overall debt.


  26. Any lender offering debt consolidation should provide their quotes for free. You are not obliged to pay any money to a lender unless they've come up with a worthwhile repayment solution that will free you from debt, and speedily. This is the basic idea of consolidation.


  27. Most consolidation companies are also obliged to offer counselling to their clients. So, if the person dealing with you does not mention anything about assigning a credit counsellor, you should remind them. A credit counsellor can make an important contribution to cleaning up your financial mess.


  28. You can refinance your consolidation yourself, if you have enough equity in your home to cover your debts. This is one of the best options for clients because the interest rate is low. BEWARE of running up your credit cards after the refinance. Make sure to cut up your cards and get rid of them. Keep the oldest for the credit history attached to it, and don't use it.


  29. If you do not have enough equity, then you can take out a second mortgage to consolidate your debts. This is not as good as a refinance, but is an option if a refinance is not possible. The rate will be higher, but should still be low enough to save you some money and get your debts under control.


  30. USA: You can also take out a line of credit in order to consolidate your debts. The only real difference between this and a second loan is that it works like a credit card. Plus it tends to have an adjustable rate that can move up and down a little over time.


  31. If you have a lot of credit card debt, then it is affecting your credit rating in a negative way. One thing that credit card providers don't tell you is that if you carry a balance on your cards and it is over 25 per-cent of your credit limit, then you are actually penalised on your credit rating, even if you pay your payments on time. So if you consolidate debts, that include credit cards with high balances, then you are doing yourself a favor and helping your credit.


  32. You can consolidate not only credit cards, but if you have a car or a personal loan, then when you consolidate those and pay them off you will improve your credit rating. Lending companies love to see that you paid off a car or a personal loan. It helps to boost your credit score quite a bit.


  33. If you consolidate your debt and payoff credit cards, then you need to stop using the credit cards and get rid of them. If you consolidate your debts and then you run your credit cards back up to their limits you are doing nothing to help yourself. You will end up in a worse situation than you were in to begin with.


  34. Get a copy of your credit report. Request a fresh copy annually to ensure that there are no errors even if you believe you have a top notch rating. If you find a mistake, contact the credit bureau immediately by letter to request the item be removed. You should also contact the creditor that supplied the incorrect information to the credit bureau and make them change it.


  35. You are able to dispute errors in your credit report. However beware of disputing true items. Also beware of disputing an error or debt that is nearly seven years old (or whatever time it takes for items to be cleared, locally, from your credit record). Your debt may have been sold off to a debt-chasing lender and your harassing them will make your case 'live' again, and may provoke them into coming after you. Let sleeping dogs lie!


  36. If your debts are just too overwhelming then get help from a non-profit credit-counselling service like the CCCS http://www.cccs.co.uk (for UK residents). They will help you work out a repayment plan or a consolidation agreement. It's not the most pleasant choice when trying to repair bad credit because it prolongs your poor credit score, but it is a safe way to go about it. Private, for-profit lenders are working for their own good. Yours is secondary.


  37. Any department store cards, credit cards, or other 'buy now, pay later' cards that you don't need: Get rid of them. Otherwise you will be tempted to spend more money on credit and this will take from the funds you have available to pay back what you already owe. Don't be someone who consolidates their debt only to pile it back up again while you're still trying to reduce the consolidation debt.


  38. Make sure you pay back your consolidation as quickly as possible. Whatever arrangement your credit advisor negotiated with your creditors should help repair bad credit and establish a better quality credit history for you. Use any spare money to pay extra on your debts if available and stay up to date with your consolidations, your rent and other bills.


  39. Most lenders who offer consolidations should not require any collateral against the loan; they look at you and what your credit and employment history say about you. If you have been making regular payments to all your creditors and have a stable employment history, those factors can work in your favor, showing that you are a good risk.


  40. Consolidation loans are lower than regular loans, due to the greater risk to the lender. Depending on the lender, the limit on the amount may be as low as £1k or as high as £20,000.


  41. You can pay off all your other creditors and keep your house - or lack thereof - out of it. Lending companies are able to stay in business by covering their risk with higher interest rates on unsecured loans than they offer on secured consolidations.


  42. While you will generally end up paying out a greater total amount by the end of the loan, lengthening the term of your consolidation will lower your average monthly payment. That could make all the difference in the world.


  43. Your credit score will improve when you get the consolidation and having all those creditors paid off.


  44. The term or length of the consolidation loan is as important as the interest rate. Decide whether an overall savings or lower monthly payments is more important.


  45. People are sometimes lazy when it comes to re-financing. There may be a drop in national interest rates or a change in their financial situation which warrants a re-finance. Clients are often inclined to re-finance with their current lender.


  46. You should investigate smaller lending companies carefully. Visiting a website is not the best way to ensure credibility. Designing a professional-looking website is a fairly simple process. Most website designers could design and upload such a website in less than a day.


  47. Make it known that you are shopping around for quotes. Lenders who know they have some competition are more likely to offer a lower interest rate. They may think you're bluffing and may not offer the best rate initially.


  48. Beware of statements such as "No cost to you". Some lending companies will add closing costs to your balance rather than require you to provide money upfront. Make sure you understand all the fees you are paying.


  49. Watch out for the 'Deal Of A Lifetime'. If you see that a company is quoting much lower than average, ask: Why so? If you you can never speak to an individual, or you have to wait 'on hold' for a long time, this speaks badly for the level of service you are likely to get.


  50. Keep a copy of every cheque you write for your consolidation.


  51. If you call your lender about your consolidation, make sure you get the full name of the person with whom you speak.


  52. Does pulling your credit report many times damage your credit? Answer: All inquiries for your credit report within a 14-day period will count as one inquiry if you are looking for a loan to refinance your home, a mortgage to purchase a home, a home equity loan, a secured loan or a car loan. If you are looking for a personal loan or a credit card, however, each inquiry will be counted separately.


  53. Check if the lender a member of the Finance Industry Standards Association (FISA) and registered under the Data Protection Act (DPA).


  54. The total cost of your consolidation will depend on the interest rate and associated fees. Together they make up the APR (annualised percentage rate)The annualised percentage rate takes into account the whole interest amount, and all those charges associated with the consolidation including the arrangement fees. This help you compare quotes accurately.


  55. The lower the annual percentage rate figure the less consolidation costs will be.Interests on consolidations are charged in one of two ways, as either a fixed or variable rate. Fixed interest rate is guaranteed for the whole term of the consolidation and it will not be subject to market fluctuations. The variable interest rate is usually lower than fixed interest rates in the beginning; however they do not offer the security of a fixed interest rate, incorporating a risk element in your finances.


  56. Lenders consider a number of things working out how much you can borrow, like your income and employment status, property value, outgoings and your credit history. Although companies use different rules, most of them share these guidelines.


  57. When you are a homeowner, you always have a better chance of borrowing against your home, because your property acts as collateral.


  58. Be sure to ask your lender about early repayment, since many of them will charge a fee if you decide to pay off your consolidation earlier than expected.


  59. In Britain some lenders may offer flexible deals allowing the borrower to make under or over repayments.


  60. Leave a portion of your regular monthly income aside as coverage for emergencies and unexpected bills.


  61. Understand every word of your consolidation agreement before you sign.


  62. UK: The Consumer Credit Act of 1974 guarantees that consumers have access to objective and revealing information about lenders. APR must legally be calculated in compliance with this regulation and must include not only the interest rate but also any additional fees.


  63. If you are having problems with your loan, inform your lender as soon as possible. The earlier you tell them, the more sympathetic the lender will be to such problems, making arrangements for under-repayments until you get back on your feet.


  64. Any concerns regarding the standing or history of a consolidation lender can be checked out on the Consumer Credit Register, where there is information available on every trader that has a license or has ever applied for one. To make an enquiry call the Office of Fair Trading, phone: 0207 211 8608.


  65. Try to find lenders that are dedicated to consolidations, because their earnings come exclusively from lending money to others, as opposed to a bank, which has several different ways to earn money. Usually, independent and online lenders can offer better deals on consolidations than banks.


  66. Start with banks and well known credit unions These are large lenders with solid reputations, so scamming will not be an issue. Although may not get the absolute best rate with a large bank, the security you receive can often be worth it. With your home on the line, you really can't be too safe.


  67. Phrases that you may come across when dealing with lenders are:

    - APR, an acronym for "annualised percentage rate", the amount of interest charged on your consolidation plus additional fees and charges.

    - Arrears, a term used to describe the amount that a borrower is behind in their agreed repayment plan, measured by either money or time.

    - Security, term used to describe assets or property put up as security for a consolidation. The lender will be entitled to reclaim the assets as compensation if repayments are not kept up.

    - Fixed interest rate, the type of interest that remains the same throughout the term of the consolidation.

    - Overpay, term that describes the making of payments over and above those outlined by the consolidation repayment plan.

    - Secured, type of consolidation that requires property or a security to be put up against the consolidation.

    - Term, the length of time over which you agree to repay your consolidation.


  68. Improve your credit-rating.

    Find out what it is at Equifax, Experian and Trans Union. lenders may access them all. Then do the following:

    Make sure you are on the electoral register.

    Satisfy liens and public judgements, such as in the County Court (CCJs).

    Correct errors, including erasing judgements older than seven years. Paid-off debts can be legitimately recorded up to seven years after settlement.

    Add information showing stability:
    - Current employment, employer's name and address and your job title.
    - Previous employment, if you've had your current job less than two years.
    - Current residence, and if you own it.
    - Previous residence if you've been at your current place under two years.
    - Date of birth.

    Avoid unnecesssary enquiries or shopping around for credit or consolidations. Multiple accesses by lenders of your credit report can indicate that you need many lines of credit. This looks like you are desperate for money, or trying to commit fraud.

    Close unneeded accounts. Close them off slowly, not all at once. Keep only two credit cards.

    Pay off credit cards. Keep balances low, and paid off on time.

    Keep your debt low; below 75% of available credit.

    Build a good payment history. Pay your bills on time!

    Open a savings account at your bank.


  69. Avoid specialist debt-restructuring or consolidation companies if at all possible. These can get you into more trouble. Negotiate yourself with your creditors, and get any agreements in writing!


  70. In order to give you their best consolidation, the lender you apply to will need at least your:
    • Name;
    • Address (with post code);
    • Time at that address;
    • Amount you want to borrow;
    • Employment (how long in your current job);
    • If you have a bank account (and how long you've had it).

    You may have to get used to the idea of getting cold calls from other lenders for weeks or months afterwards. Try to stop this by telling the initial consolidation lender "Please do not sell or pass my personal data on to other lenders. Thank you."


  71. Don't take on a consolidation thinking "Well, I can always go bankrupt if I get into difficulties". This is folly. If you go bankrupt, it will be entered in the records of the County Court, and you will find it very difficult, if not impossible, to get credit of any kind in the future, except at usurious rates. Also, the lender you owe the money to will make an entry into your credit record. Credit referencing agencies make it their business to sift County Court records, to keep their databases up to date. You will have shown you can't be trusted to pay back a consolidation, therefore why should any lender, hire purchase lender or credit card lender take a chance on you?


  72. You can improve your credit-worthiness by:
    • Staying in one place for two years or more;
    • Your house or flat not having had previous occupiers with bad credit;
    • Being on the electoral register;
    • Having a credit card or store card;
    • Paying off your credit-cards, store cards and Blockbuster video rentals* regularly;
    • Getting black marks removed from your credit report. Go to Experian, CallCredit and Equifax;
    • Paying your bills before the due date;
    • Having the same bank account for two years or more;
    • Being in credit on your bank account (no overdraft, no unauthorised overdrafts);
    • Having £50,000 in the bank already!
    • Owning property.


  73. If I were looking for consolidation, I'd widen my horizons. What do you want? Money. How does one get more money? By:
    • Getting a second job or paying hobby;
    • Getting a different job that pays better;
    • By scrounging from friends or family;
    • By selling an unnecessary asset, like a flash car;
    • By saving what you've already got - no holiday, give up cigarettes and booze for a while!


  74. Any consolidation site on the internet you find should be scrutinised according to the following checklist:
    • Has it got a registered lender name?;
    • Has it got a registered office?;
    • Has it got a street address, rather than a P.O. box?;
    • Has it got a telephone number?;
    • How long has the lender been in business?;
    • How quick are they to respond to queries?;
    • How far away are they from you physically?;
    • Are lender personnel mentioned by name on the site?
    Once you've settled on a few consolidation lenders, you can enter their business name in a search engine with the words 'problem' or 'scam', and see what comes up.



  75. Study lenders. Only by requesting quotes and comparing the fine print can you be sure of getting the lowest rate. With some sites you can make side-by-side comparisons, while other sites will email you multiple financing offers. consolidation brokers work hard to attract customers by negotiating lower rates with lenders, so you often will find better deals through their sites than through the high street, or newspaper or TV ads.


  76. It's important to note that the consolidation application process will be influenced by the amount you're trying to borrow, your credit history, your debt-to-income ratio and other factors. With that said, here's how the basic process works when you apply online for a consolidation. You can be sure that consolidation lenders will review your credit report and credit score (two different things), so it makes sense for you to review these yourself first. Make sure your credit report doesn't have any errors or discrepancies. If it does, submit a correction request to the lender with the mistake; either Equifax, TransUnion, CallCredit or Experian.


  77. You need to know how much of a consolidation loan you can afford. Don't rely on the lender; find out yourself. When a lender approves or disapproves a consolidation, they do so based on credit scores, risk factors, and other data-driven elements. They don't consider how the consolidation will affect your life. Use an online consolidation calculator. This will help you determine where your consolidation "comfort zone" lies.


  78. Some unethical "lenders" use the Internet to take advantage of consumers through their online applications. This can lead to identity theft or passing your details onto umpteen other lenders. Before you apply online, always make sure you are using a trusted, well-known lender. Most will only ask you for some preliminary information regarding your income, debt, etc. They do this for basic screening; they want to make sure you're reasonably qualified for a consolidation before spending more time and money processing you.


  79. By providing only basic information initially, you can find out if the lender will touch you. You can avoid filling out a full consolidation application for a lender who can't help you. This will also limit the number of credit enquiries made by lenders. If you have too many, it can send up a red flag to other lenders that you're having trouble being approved.


  80. The interest rate is one of the key elements that determines your monthly repayments. So it should also be a key decision-making criterion when you apply. Many times, online lenders can offer better interest rates than traditional high-street lenders. They can be extremely efficient in processing your application. This obviously limits face-to-face time, paperwork, and other factors that can increase the lender's overheads.


  81. The world of lending is a highly competitive one. If you have decent credit and are generally a good candidate for a consolidation, online lenders will try to offer you the lowest rate and best terms possible, in order to get your business. Interest is only part of the picture. So when comparing online lenders, be sure to ask about closing costs, prepayment penalties, and other aspects of the "fine print".


  82. It's important that you get everything in writing. This is good financial practice in general, but it's especially important with large financial transactions. For example, if a lender promises you a certain interest rate based on your qualification and credit score, ask them for it in writing.


  83. Some lenders are not legitimate and can take your monthly payments and keep them for a month or more before they make your payments. They collect interest on the money all the while, causing you to accrue late fees and possibly collections. They can actually cost you money and make your situation worse.


  84. Roughly 35% of your credit score is determined by your bill-paying history: late payments, bankruptcy, late collections etc, can all give you a low credit rating. It is generally checked over a two-year period and it is the more recent debts that carry the most weight. Lenders also take into account your income and your potential earnings in the future. Someone with a poor credit score may find themselves being refused a consolidation. An adverse credit rating can make it harder to refinance - especially if your credit score is lowered by defaulting on payments to your current lender.


  85. You can improve a low credit score. By managing finances carefully, you can accumulate 'points', making consolidations more viable. Ensure repayments are met on time. If you are having trouble with your bills, tell your creditors. Don't leave it until the payment is due. Lenders view people who owe smaller amounts on many credit facilities as being a lower risk than those who owe large amounts on fewer.


I hope these few simple suggestions will be of some use to you in getting a good value debt consolidation loan.







 


















The hardest thing in the world to understand is the income tax.

Albert Einstein.





Time now: 00:52:58 | Saturday | May 04 | 2024.
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