The Risk Of Bad Debt Consolidation Loan
So, you are up to your eyeballs in debt? Are those bills beginning to pile up on your doorstep every day? Is your answering machine is full of nasty messages from debt collectors or your bank? At this point in time, you may have decided that enough is enough! It is time to change your life and get in control of your debt.
You have most likely heard of the terms 'debt consolidating' or 'home equity loan' on the radio or TV.
If a number of credit card debts or car loans are getting too much for you, then a bad credit debt consolidation loan is probably a VERY good option for you! You have most likely also heard of some of the risks involved.
There are pros and cons in just about EVERYTHING in life, and when it comes to loans, of course there will be different fees, charges and interest rates that are involved that need to be investigated before deciding whether the debt consolidation or loan will be in your best interests!
The Good Benefits of Debt Consolidation
There are a lot of good points to be made about debt consolidating. Just think - you will no longer be hounded by numerous debtors! You do not need to fear playing back the messages on your answering machine anymore!
Debt consolidating means that your finances will be so much simpler, because you only need to make one payment each month, instead of several!
Oh, and the interest rate that you pay will on a consolidated loan will be far lower. In fact, you should be able to decrease your debt much faster and earn some gold stars on your credit report by taking out a bad credit debt consolidation loan!
What else is bad... apart from the Fees and Interest? What about Credit Ratings?
Bad credit is a problem for a lot of people who are looking at debt consolidating. Do not think though that if you have bad credit, a bad credit debt consolidation loan is not available to you. It may just take a little but more hard work to get there. In fact, it may even help you repair your credit report.
A lot of people seem to think that their credit rating is only affected negatively if they miss a payment or bill entirely, or if they get a visit from the 'Repo man! In actual fact, your credit can be affected by so much as paying a bill thirty days late. You will lose even more points if you pay sixty or ninety day late, respectively.
If you have bed credit debt consolidation loan lending will usually require you to have some collateral to which the debt can be secured against. In most cases this takes form in a home equity loan.
Here, the equity is your home is unlocked, which means if you do not pay the debt the lender can take your home. The risk to the lender here is reduced and you will have an easier time getting a loan, especially if you have bad credit! You will also be able to get a lower interest rate and also have fees attached to the loan reduced.
The obvious risk to you here is that you could lose your home. If your debt is large enough that you are unsure about your ability to pay it off a debt consolidating loan may not be a good option if you are using your home as collateral.
If you feel this applies to you, you may wish to engage the services of a financial counselor. Most states offer these services free of charge.
The Ugly - Debt Consolidation Scams... Do NOT get Caught up in a SCAM!
Con artists are well versed in taking advantage of people, especially those people who are vulnerable and that are in a dire situation! Financial situations are no exception, in fact some of the most complained about scams in the United States of America relate to debt consolidating and credit repair programs.
A lot of these revolve around telemarketing scams. You may see a TV ad, or even get a phone call offering to repair your credit rating for anywhere between one hundred and a thousand dollars. Unless the company is one you know and trust, these offers are usually a bad idea. A LOT of them are fraudulent.
No one is able to repair your credit rating instantly, especially without paying the outstanding debts that exist on it.
Even if you did have the cash available to do this, it would still take months, or even years, of good conduct for your credit rating to improve. So be careful, do a bit of research on the financial institution you plan on dealing with to help with your debt consolidating!
You have most likely heard of the terms 'debt consolidating' or 'home equity loan' on the radio or TV.
If a number of credit card debts or car loans are getting too much for you, then a bad credit debt consolidation loan is probably a VERY good option for you! You have most likely also heard of some of the risks involved.
There are pros and cons in just about EVERYTHING in life, and when it comes to loans, of course there will be different fees, charges and interest rates that are involved that need to be investigated before deciding whether the debt consolidation or loan will be in your best interests!
The Good Benefits of Debt Consolidation
There are a lot of good points to be made about debt consolidating. Just think - you will no longer be hounded by numerous debtors! You do not need to fear playing back the messages on your answering machine anymore!
Debt consolidating means that your finances will be so much simpler, because you only need to make one payment each month, instead of several!
Oh, and the interest rate that you pay will on a consolidated loan will be far lower. In fact, you should be able to decrease your debt much faster and earn some gold stars on your credit report by taking out a bad credit debt consolidation loan!
What else is bad... apart from the Fees and Interest? What about Credit Ratings?
Bad credit is a problem for a lot of people who are looking at debt consolidating. Do not think though that if you have bad credit, a bad credit debt consolidation loan is not available to you. It may just take a little but more hard work to get there. In fact, it may even help you repair your credit report.
A lot of people seem to think that their credit rating is only affected negatively if they miss a payment or bill entirely, or if they get a visit from the 'Repo man! In actual fact, your credit can be affected by so much as paying a bill thirty days late. You will lose even more points if you pay sixty or ninety day late, respectively.
If you have bed credit debt consolidation loan lending will usually require you to have some collateral to which the debt can be secured against. In most cases this takes form in a home equity loan.
Here, the equity is your home is unlocked, which means if you do not pay the debt the lender can take your home. The risk to the lender here is reduced and you will have an easier time getting a loan, especially if you have bad credit! You will also be able to get a lower interest rate and also have fees attached to the loan reduced.
The obvious risk to you here is that you could lose your home. If your debt is large enough that you are unsure about your ability to pay it off a debt consolidating loan may not be a good option if you are using your home as collateral.
If you feel this applies to you, you may wish to engage the services of a financial counselor. Most states offer these services free of charge.
The Ugly - Debt Consolidation Scams... Do NOT get Caught up in a SCAM!
Con artists are well versed in taking advantage of people, especially those people who are vulnerable and that are in a dire situation! Financial situations are no exception, in fact some of the most complained about scams in the United States of America relate to debt consolidating and credit repair programs.
A lot of these revolve around telemarketing scams. You may see a TV ad, or even get a phone call offering to repair your credit rating for anywhere between one hundred and a thousand dollars. Unless the company is one you know and trust, these offers are usually a bad idea. A LOT of them are fraudulent.
No one is able to repair your credit rating instantly, especially without paying the outstanding debts that exist on it.
Even if you did have the cash available to do this, it would still take months, or even years, of good conduct for your credit rating to improve. So be careful, do a bit of research on the financial institution you plan on dealing with to help with your debt consolidating!