Debt Consolidation Loans Information Blog

There is no guarantee that you will qualify for a Debt Consolidation Loan. If you own a house with equity, you will probably qualify at your bank for a secured line of credit or second mortgage, or you can refinance your mortgage to consolidate your debts with a Mortgage Debt Consolidation. However, if you don’t own a house, or if your house has no equity, you may not qualify.

If you are rejected for a loan, here are the steps you should take:

1. Ask the bank why you were declined.  It may be that you are close to qualifying, so if you can reduce your debt or increase your income you may be able to re-apply again in six months or a year.
2. If your bank won’t give you a mortgage, consider talking to a mortgage broker.  They have access to many different lenders, so they may be able to get you a mortgage even when the bank says “no”.
3. Consider asking a friend or family member to co-sign for you.

WARNING: If a friend or family member agrees to co-sign for you, they are now fully responsible for your loan.  If you don’t make the payments, the bank can now pursue your co-signer for payment. You should only ask a friend or family member to co-sign on your behalf if you are absolutely certain that you can make all of the payments.  If you are afraid that you may at some point miss a payment, do not get a co-signer.WARNING: Each time you apply for a loan and are rejected, a note appears on your credit report showing that you were rejected.  Your credit score goes down each time you are rejected for a loan. If you are rejected, ask the bank why you were rejected.  If you can take action to qualify in the future (perhaps by increasing your income, or paying off some of your old debts) then wait until you have fixed the problems before applying again.  A series of rejections will make it even harder to borrow in the future.

The easiest type of debt consolidation loan to qualify for is a Secured Debt Consolidation Loan.

As the name implies, a secured loan is a loan secured by an asset.  For example, a car loan is a loan secured by a car.  If you don’t make your loan payments, the lender can repossess your car.

Another common type of secured loan is a mortgage, which of course is a loan secured by the value of your house or other property. Why do lenders like making secured loans?  Simple.  They know they can recover some or all of their money if you don’t pay.

In contrast, an unsecured loan has no security, so if you don’t pay there is no asset, like a car or a house, for the lender to seize.  It is the value of this security that makes it easier for the lender to lend to you, and to offer you a lower interest rate on your loan.

That’s why the interest rate on a house mortgage is lower than the interest rate on a credit card.  Here are some sample interest rates (which are presented for illustrative purposes only, since interest rates can change on a daily basis):

• House mortgage                6%
• Car loan                             8%
• Bad credit car loan            15%
• Bank credit card                18%
• Store credit card                25%
• Finance company loan       33%

What does this list illustrate?  Simply put, the best interest rate on a debt consolidation loan will be on a secured debt consolidation loan, such as a mortgage.
If you have equity in your house, you can borrow against that equity to consolidate your higher interest debts.

Information about Mortgages and Home Equity Loans
Mortgage Debt Consolidation
Home Equity Debt Consolidation
Refinance Debt Consolidation
Reverse Mortgage
Debt Consolidation Home Loan
Debt Consolidation Mortgage Refinance
Mortgage Loan Debt Consolidation
Debt Consolidation Mortgage

If you own a car with no loans against it, you may be able to pledge that car as security for a loan or line of credit with your bank.

If you are applying for a debt consolidation loan, here are six practical things you need to know to increase your chances of getting the loan.

• The best place to get a loan is usually the bank where you already bank.  They know you.  They know how much you earn, because you deposit your paycheque with them each week.  They want to loan you money, because that’s how they make money.
• If you know someone else who also banks at your bank, ask for a referral to a loan officer they know.  A referral may increase your chances of success.

• Be ready to explain why you want the loan.  In other words, what are you going to do with the money?  You should have an answer ready for that question.

• Be prepared to negotiate.  If the bank agrees to give you the debt consolidation loan, but they require you to cancel all but one of your credit cards once they are paid off, are you willing to do that?  (Here’s a bonus tip: yes, you should be willing to do that, because you want to prevent any increases in your debt).

• Read the fine print.   If they offer you a loan, be sure to understand how much you are required to pay.  What’s the interest rate?  How many years will it take to repay the loan?  Can you pay it off early?

• Discuss payment frequency.  If you get paid weekly, you should ask the bank to take the payments directly out of your bank account weekly.  A weekly payment is easier to manage on a weekly paycheque than a monthly payment, and you will pay the loan off faster if you pay weekly.

By being prepared you increase your chances of getting a debt consolidation loan.

There are three significant advantages of a debt consolidation loan. First, the interest rate charged by a financial institution for a personal loan is usually lower than the rate you would pay on a credit card. This means you will save on interest payments.

Second, once you get your debt consolidation loan, everyone you owe money to will promptly be paid in full. You have the chance to maintain a good credit rating if you act quickly.

Finally, you will only have to make a single monthly payment to your financial institution, instead of making several monthly payments to various creditors, which is easier to manage.

There are two significant disadvantages of a debt consolidation loan.

Although a debt consolidation loan may help you save on interest charges, you still have debt. For example, a credit card debt consolidation loan does not reduce the total amount you owe. If you are not careful, and you still have access to your accounts and credit cards, there is a chance that you will be tempted to use them, and that will increase your debt and make matters worse.

Second, banks may not be as flexible as credit cards and other higher interest rate lenders. If you run into further problems, financial institutions may be less understanding and may refuse to accept a late payment. Therefore if you get a debt consolidation loan, be sure you will be able to make all payments.

Tomorrow we will review the advantages of a debt consolidation loan.

You can apply for a debt consolidation loan at a bank or a finance company.

Be aware that many finance companies offer consolidation loans, but generally charge a higher interest rate compared to a mainstream financial institution.

You can also apply for an online debt consolidation loan over the internet.

Whether you get a debt consolidation loan over the internet, at a bank, or at a finance company, it is very important to carefully review the terms and conditions, such as the amortization period and the interest rate, so that you know exactly how much the loan will cost.

Before you apply for a debt consolidation loan, do two things.

First, prepare a monthly budget showing your monthly income and expenses.

Second, draw up a complete list of your current debts to determine the total amount of your outstanding debt. Be honest and don’t leave anything out. The loan officer will be reviewing your credit file, so honesty is the best policy.

Next, read all loan documents carefully. If the interest rate offered by your financial institution seems too high, don’t hesitate to shop around at other financial institutions to try to negotiate a better rate. However, your credit score will be reduced if you apply at numerous places in a short period of time, so do not apply at more than three different banks.

In most cases, once the loan has been granted, the bank will pay off the outstanding debts to your creditors. Your financial institution may close credit accounts you have with stores, businesses or credit card issuers to make sure that you don’t increase your debts while paying off the consolidation loan. Even if they don’t close your other accounts, cut up your credit cards to ensure that you don’t get into debt again.

It does not cost anything to apply for a debt consolidation loan. If a potential lender requests an up front fee, don’t apply for that loan.

Lenders make money by charging interest on the loan. If they also want to charge you application fees, you should not apply for the loan. If you pay to apply for a loan, it’s easy for the lender to decline your loan application, but then keep your application fee. Obviously that is not in your best interest.

When you apply for a debt consolidation loan, be sure to ask the lender about interest rates and all other fees that they will be charging.

I was surprised when I read the following: “South Carolina Man Burdened by $213,000 in Debt Discovers Astonishing ‘Military Strategy’ Secret that Made Him Debt Free in 4 Years!”

After some research, I discovered the following story, presented for you here:

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! What’s more … it will start to dramatically improve your credit in 90 days or less!

• It’s NOT filing for bankruptcy
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• It’s NOT about living on macaroni and cheese for the next 5 years
• It’s NOT about investment schemes or advice
• It’s NOT about increasing your income
• It’s NOT hard – anyone can do this
• It’s NOT anything illegal or immoral

This debt consolidation loans information blog doesn’t have the space to give more details, so  Click Here to Become Debt Free; your new life awaits!

In most cases, getting a debt consolidation loan will actually help you improve your credit score. The reason is simple: If you currently are juggling payments on four or five different credit cards and other debts, getting a debt consolidation loan to combine all of your debts into one monthly payment means that you are no longer juggling many payments. Having to make only one payment means you are less likely to miss a payment, and it’s missed payments that can seriously damage your credit rating. Never missing a payment again because your finances are easier to manage will improve your credit rating.

In addition, the fact that you were able to borrow to obtain a debt consolidation loan shows that you are a credit worthy individual, and again, that improves your credit score.

But there is one word of caution: When you get your debt consolidation loan, be sure that the money is used to immediately pay off your other debts. If you wait a few weeks or months to pay off your other debts, your credit rating may get worse, because you are now late on your payments.

To find out if a debt consolidation loan is right for you, try out our FREE debt consolidation loan calculator.