debt consolidation loans

Should You Consolidate Your Student Loan Debt?

August 18, 2014 by editor

If you are one of the millions of people that have several student loans that you are currently paying on you might have considered consolidation. This option can certainly make your life simpler every month when it comes to remembering to pay everything that you have due, but it’s important to know some of the facts before you make the decision to consolidate your student loans. The usual consolidation loan for this type of debt is made through the Department of Education and, as with everything, there are good points and bad points to going through with them.

The Benefits of Trying To Consolidate Your Student Loans

Of course, the main advantage of going through with a loan consolidation for your school debts is that one monthly payment. This makes it much easier to get your loan paid on time. In addition, you might that they offer you payment plans that are more suited to your personal finances. One of these is even based on the income that you bring in every month, which is helpful when you might be having trouble making ends meet.

When you consolidate your student loans you might also find that you total payment is reduced. This is because they have longer repayment in general, so it gets spread out a little more. In addition, you may also fins that you have a lower interest rate to go along with it. Because they will switch you to a fixed annual percentage rate, you can find yourself in a much better position to get your loans paid off easier. This is also a good thing for you because it sets you up for the future well. It means that no matter what, you will always remain paying that interest rate, even if they go up later.

The last benefit of deciding to consolidate your student loans is simply that doing so will not affect your credit. This can actually work in your favor, as well because if you are paying several loans and keep paying them late or missing payments then you are already negatively affecting your rating.

Some of the Bad Sides of Trying To Consolidate Your Student Loans

Now that you understand all of the advantages of this process, it’s time to look at some of the ugly parts. After all, if it were good things, then no one would ever question consolidation. The biggest disadvantage of consolidating your student loan is that it can lead to you paying a higher amount in the end. Because consolidation can spread out your loans terms, your monthly payment might be lower, but it can add more interest to the overall amount.

In addition, while those fixed interest rates can be a good thing most of the time, if you enter your loan consolidation during one of the fluke periods right before national interest rates fall, then you are still going to be stuck paying that higher amount.

There is also one more thing to think about when you are trying to decide if you should take the step to consolidate your student loans. Check on your current loan holders and make sure that you that you aren’t getting any special bonuses for leaving the loan in their hands.

What Is The Right Choice For You?

Because of a new law passed by Congress, you are guaranteed to have an interest rate that is fixed for the life of all of your new student loans. The rate will be determined by the market and they will be set every June. This is good news, because even though interest rates can still be varied, you will know exactly what to look forward to when you sign on a new loan from now on. This does mean that the advantage of loan consolidation making your interest a fixed amount is now null and void though, as long as it’s a new loan that you are considering.

One of the more important things for you to consider is what you are willing to give up for the ability to be on top of your finances at this very moment. If you are having trouble making ends meet, then it can be helpful to consolidate your student loans. This is true as long as you remember that it will mean that you are going to be paying more in the long run in exchange for that lower payment. On the other hand, if you are comfortable with your payments as they are then you are better off keeping them as they are and just paying them off faster and with less interest.

There is a lot to keep in mind when you are trying to figure out the best route for your financial decisions, however hopefully this guide has made the decision a little bit easier for you to decide.

Nine Tips for a Debt Consolidating Loan

March 22, 2014 by editor

The majority of people will be familiar with ads for debt consolidation, which say they can “help you get out of debt quickly” and those that say they can “cut your payments by 50%”. A single loan with a lower interest rate and better payments is usually the end result of consolidating your high interest loans into one. However, things don’t always go as smooth, which is why you need to be familiar with some tips for a debt consolidating loan. These will not only give you extra info on choosing wisely, but can also save you from making the wrong decision! Read the following tips for a debt consolidating loan and get one step closer to making the right decision.

Order Your FICA Score and Credit Reports

The loans you get are based on your credit score, so it is important you know what it is. This is the first of tips for a debt consolidating loan, as if you find you have a reasonable credit rating and fairly good score, then you can consolidate your loans at an improved rate.

Check Out Other Options

Another one of the tips for a debt consolidating loan is to check out other options.

If you are after saving money, you may just want to consider paying off your debts as quickly as you can by arranging them.
You can go through your loans to check which has the highest interest rate.
Pay that off first and still make small monthly payments on other debts.
Contact credit card companies and discuss lower interest rates.
Consider consumer credit counseling. This has helped many with low-cost or even free counseling on how to prepare a budget and manage debt.

The Differences between Consolidation Loans, Debt management Plans and Debt Negotiation

You will find there are several companies online who claim they can decrease your payments as well as get you out of debt a lot quicker using consolidation loans. For this, they could be using several strategies, such as bankruptcy, debt management and debt settlement. Another one of the important tips for a debt consolidating loan is understanding the difference between the three.

Debt Consolidation Loan

This is where you borrow money and pay off other loans.

Debt management Program

This is when a debt management company or a credit counseling agency serves as the trader between your leaders and you.
It tries to negotiate decreases on your loan fees or interest rates.
A debt management program allows you to reduce your payments.
You then pay the debt management company or credit counseling agency each month.
The money is then distributed from here to your creditors.

Pay Off Your Debt Quickly

A debt consolidation loan can get you a lower monthly payment because you are spreading the payment over a lengthened time span. Paying off your debts as soon as you can is the best of tips for a debt consolidating loan.

Getting the Right Loan

A secured loan is one that is supported by a security benefit. Getting a loan that is secured is possible. A secured loan is usually secured lines of credit, second mortgages or home equity loans. These have a lower interest rate than unsecured loans, as they are less risky for lenders.

Comparison Shop

Never sign up for the first debt consolidation loan you are offered. Some tips for a debt consolidating loan cannot be avoided and this is definitely one! You need to get several quotes from numerous different companies and compare the terms and interest rates. Getting all quotes in writing is recommended, as this allows you to easily compare them.

Carefully Read Your Contract

Before signing anything, you need to read every word thoroughly until you understand it all. If you have any questions, make sure you ask them until you properly understand the answers, even if that means asking several times. Hiring a lawyer can also help with things that you need answers to.

Don’t Pay For Credit Insurance

Many lenders will try and pressure you into buying credit insurance. They may even force you so much that they say things like your application will be rejected or they could even hide the cost from you. If you experience yourself in this situation, you need to get out fast and file a complaint with fitting authorities in your state. Credit insurance can add a large cost to your loan, and usually offers very little security.

Finalize the Loan Process

Now it’s time for the completion of the application process, which should be straightforward, but can take some work and time. If at the end of the procedure, you find the loan rate is not as expected or based on what you were quoted, then you must ask why. After this, you can check with your next best options and during the whole process, make sure you are not taken in with the “bait-and-switch.”

Tips To Avoid the Risks of Debt Consolidation Loans

October 16, 2013 by editor

Taking out a loan is a tempting choice for solving financial woes but there are risks of debt consolidation loans. This is a single loan for the total of all bills that you would like to pay off. Using this loan you eliminate all individual bills and instead pay one loan monthly.

Usually the debt being paid off is credit card related with high interest rates so when paying minimum balances you are paying only the interest. The principle remains and you are not really paying down the debt. With lower interest you are able to actually chip away at your core debt. Debt consolidation loans generally allow you to pay over a longer period as well thus making your monthly contribution smaller.

The Risks of Debt Consolidation Loans

Knowing the risks of debt consolidation loans will help you avoid creating more debt while you’re working to pay off the original.

Hazard 1: Feeling free of debt.

Paying off the credit cards that have been hanging over you is a great feeling but that zero balance can give the false sense of being bill free. You still have to pay just as a single loan instead of many smaller bills.

Hazard 2: Repeating Old Habits

If your reason for getting a consolidation loan is overuse of credit this warning is for you. Now that the cards have so much equity available, you may be enticed to begin using them again. If you can’t control your spending you may end up running up the same card you are still paying off with your loan. The best way to avoid this is to close off your accounts save for one. The single open account can be used sparingly and paid off in a timely manner to fix your credit score or if your score is still intact this card should be kept somewhere you cannot use it for impulse purchases.

Hazard 3: Check that interest rate

If your credit is good or you are able to provide collateral you can benefit from the lower interest discussed earlier. If, on the other hand you have no collateral to put up and your credit score is already low you run the risks of debt consolidation loans interest being higher than that of the original debt and ending up owing more than you did originally. Be certain to investigate more than one lender and various solutions before committing to something that will not significantly lower your current payments.

Hazard 4. Collateral can be the highest price to pay

The greatest equity most people have at their disposal is that of their home. Risking your home for a loan means if you are unable to pay back the loan for any reason you will lose your house. This is true no matter what you use to secure your loan however it is one thing to lose an automobile, piece of jewelry or other valuable, it is a devastating loss to say goodbye to the sanctuary of a roof over the head of your family.

Take some time to seriously consider whether you can avoid these risks before taking the plunge. There are other ways and it is best to investigate each fully and making an educated decision.

Debt Consolidation Loans CAN Work For You

Now that you have considered the risks associated with this type of loan we can discuss the ways you can make it work for you. One useful point is that consolidation loans can be used in a much more flexible way than debt management or settlement which are far more limiting as to the types of debt you can pay with them. Secure loans cannot be included in other debt payment types but loan consolidation can take them under their umbrella as well as loans that not even bankruptcy can forgive such as Federal Student Aid.

Having looked at both the possibilities and risks of debt consolidation loans if you believe this is the right choice for you here are some tips for making the most of the program:

If the interest is not lower than your current interest keep looking. There are many options such as payday loans, peer loans, secure and personal loans. Do not jump into the first one you check, make sure you’re getting the best possible rate.
Be sure you’re eligible for the right loan. Good credit and a steady paying job are essential.
Be prepared. Unlike other programs there is no one there to guide you along the way. Go in with a payment plan and stick to it.

The most important to do is to learn from the situation and avoid repeating mistakes. If you are aware of and avoid the risks of debt consolidation loans you can get yourself out of debt.

Consolidate Private Student Loans: Is It Right for You?

September 6, 2013 by editor

If you are one of the many Americans who have accumulated multiple student loans from both federal and private sources, you may be wondering if it would be wise to consolidate private student loans, especially if your current situation requires making monthly payments to multiple lending agencies with different due dates.

Reasons for Consolidating Private Student Loans

There are many valid reasons to consolidate private student loans. Some of these include:

You may be able to eliminate high interest loans.
You may be able to reduce the number of monthly payments.
You may be able to extend the length of the combined loan, thereby reducing the monthly payment.
You may improve your credit report and score by reducing your risk of inadvertently missing payments.

The best time to consolidate private student loans is before you have missed any payments or been declared delinquent on one or more of your loans. These events will seriously hurt your credit score, and make the decision to consolidate private student loans more expensive or even out of reach entirely.

Downsides of the Decision to Consolidate Private Student Loans

While the decision to consolidate private student loans carries many potential benefits, there are a few potential downsides to consider, including:

Consolidating your private student loans and extending the loan term in order to achieve a more affordable monthly payment amount can substantially increase the total amount of principal plus interest you will end up paying.
Multiple attempts to consolidate private student loans, especially when subsequent consolidation efforts include other types of debt may actually damage your credit score, particularly if one or more applications are denied by lenders.

Consolidating Your Federal and Private Student Loans

In most cases, federal student loans have lower interest rates and much more flexible terms and private student loans. If you have more than one federal student loan to payoff, it may be possible to consolidate the federal loans without sacrificing their low interest rates and flexibility. It is almost certainly unwise, however, to pay off a federal student loan with the same loan you use to consolidate private student loans. The necessity of making two separate payments is almost always worth the extra effort.

How to Get Started When You Decide To Consolidate Student Loans

Your advanced degree in Archaeology or Medieval English Literature are no doubt worthy accomplishments of which you are justifiably proud. The courses required to attain those degrees, however, probably did little or nothing to advance your personal financial management skills. If managing your student loans and other debts has become difficult given your current salary, it would almost certainly be an advantage to seek advice from a nonprofit debt counseling service. Here are couple of ways a debt counseling service can help:

The debt counselor can take an objective look at both your income and debt payment burden, and help you develop a realistic monthly budget that contains an allocation for debt repayment.
If the amount available for debt repayment is too small to service all outstanding debts, the debt counselor can advise you as to all of your alternatives, including consolidating your private student loans.
If the decision to consolidate private student loans is really right for you, the debt counselor can help you obtain a copy of your credit report, and advise you as to the interest rate and terms you should look for when seeking your consolidation loan.

Here Are A Few Things Look For When Selecting A Debt Counseling Service:

Beware of service providers that guarantee they can solve your debt problems before they have reviewed your finances
Make sure that both the debt counseling service and the individual debt counselor you work with are accredited by a national trade association.
Claims that seem to be too good to be true probably are. Unfortunately the credit counseling business has attracted more than its share of unscrupulous operators. It takes time for regulators and trade associations to weed out the bad actors. You are probably safer using a debt counseling service that has been in business for at least 5 to 10 years.

When you are ready to begin selecting a lender to consolidate private student loans, be sure to interview each loan officer you might work with carefully before filling out an application. Bring a current copy of your current credit report with you, and tell the loan officer what interest rate and loan terms you want. Ask if there are credit score thresholds required for the kind of loan you are looking for, and if your current credit report and score would satisfy those thresholds.

Finally, in all likelihood the loan officers you interview will be dressed in appropriate business attire. No matter what your current employer requires for work clothes, try to arrive at each interview dressed in a manner that will instill confidence in the loan officer you are meeting.

There Are Ways to Consolidate Debt without Breaking Your Bank

August 7, 2013 by editor

If you have many credit cards with debt on them life can be complicated. Outstanding debt can take over your life- depriving you of things that you would have otherwise liked to do with your money. It often takes a long time to pay these debts off. Some people moreover have debt on a large number of cards, for instance seven different cards. But, despite seeming like a daunting task, debt consolidation is possible. It will take some time to consolidate and pay off your debt, but there are a few ways to consolidate debt that you should explore in order to get out from under debt.

Use Debt Consolidation

Debt consolidation is a one of the most efficient ways to consolidate debt. This involves procuring a loan to repay all your outstanding debt so that instead of several high interest debts you have just one loan to pay off. High interest credit card debt, education loans and outstanding utility debt can be included in this loan, while mortgages cannot. Debt consolidation can be done by:

Major Banks
Non-profit debt consolidation companies
Credit Union

Ways to Consolidate Debt It is a good idea to compare several debt consolidation loans before you decide on one as sometimes debt consolidation companies charge high fees in order to consolidate debt and this may add to your existing debt. However, banks or credit unions have lower interest rates on loans and lower fees. While you do need to demonstrate an ability to pay back your debt consolidation loan and steady income, getting a debt consolidation loan is fairly uncomplicated. Your debt consolidation agency will pay off all your debt on your behalf and you, then, will only have to pay one loan off at a lower interest rate than your credit cards.

Bank on Your Home

If your own your own home, use the equity you have on your home to pay off your outstanding debt. You can borrow, with a home equity or a line of credit, borrow up to 30% of your home’s value. Home equity loan and a home line of credit is a way to unlock the value in your home to solve debt issues. A home equity loan is a close-ended account that has to be repaid over a certain period of time while a home line of credit is an open-ended account like a credit card against which you can repay and borrow against. Home equity loans tend to have higher borrowing limits and low interest rates. This is beneficial as interest rates on home equity or a line of credit is way less than APRs on credit card balances. However, using the value of your home to pay loans does have its risks. If you forestall on payments you could put your house at risk. You may end up with home foreclosure, putting you in a worse position than before.

Borrowing from a Life Insurance Policy

Although this should not be your first choice, borrowing against a life insurance is a viable and preferable option than being bankrupt. You can borrow the cash value of your life insurance and use it to repay your high interest debt. You have to consider, though, that there is an interest on this loan (like any other loan) that needs to be paid at regular intervals. Remember if the loan is not repaid then you will no longer have life insurance for your loved ones after death.

Balance Transfer to other Credit Cards

If you have a card with a big credit limit or are being offered one, consider transferring any outstanding debt to the one with a higher limit. Most companies that you consider moving to will offer you a low balance transfer interest rate, therefore by moving debt you will be saving money. By saving on interest, you may be able to pay debt back sooner.

Borrowing from Retirement

Remember that over all your working years, you paid into your retirement? You can get an advance on this retirement money. But, this really should be a last resort option because the amount has to be paid back over five years. Any money that is not paid back is considered early withdrawal and the amount is subject to income tax and penalty. If you retire the loan must be paid in 60 days or early withdrawal penalties will apply.

What’s Negative about Consolidating Debt

Debt consolidation can provide you with peace of mind and better credit ratings, but each has its benefits and harms. Know the benefits and harms of the debt consolidation method you choose and be sure to pick one that will get you out of debt rather than one that will push you deeper into it.

It is good to know about the several ways to consolidate debt as high interest debt can destroy your lifestyle. But, it is only viable if you are disciplined enough to pay off any debt consolidations as well and you make considerable effort to change your habits to pay off all debts.

Best Option For Credit Card Debt Relief

April 11, 2013 by editor

The best option for credit card debt relief involves getting rid of two things: high interest and irresponsible usage.

Let us begin with the high interest rate. These plastic cards are notorious for accumulating into a big amount in a fairly short amount of time – at least if you continue using it without any payments. If you are currently watching helplessly as your credit card debts are continually increasing, you need to get debt relief help and you need it fast. Even if you are paying the minimum amount stated on your bill, that will not get you anywhere. At the very least, you are only paying of 4% of your total balance. It will take you decades to complete your payments.

One debt relief option that you can benefit from is debt consolidation. It comes in two ways. You can opt to get debt consolidation loans that involves borrowing money that is big enough to pay off your credit card debts. Aim to get a low interest loan so that you get smaller monthly payments. By eliminating the high interest of the credit cards and the fees usually associated with it, you can lower your monthly payments even by half. You can also make steady monthly payments for a maximum of 5 years – since most personal loans are paid off by that time. Of course, the key is the low interest rate that can only be achieved with a good credit score or a collateral.

If you have neither, your other option is debt management. This involves getting the aid of a debt counselor who will review your debts and the finances you will use to pay it off. They will help you come up with a debt management plan that will be submitted to your creditors for negotiation. They will even negotiate to lower your interest rate and if they reach an agreement, that will help you make better progress on your debts.

But while the high interest rate is removed, another aspect that has to be eliminated is your irresponsible use of these cards. If you do not correct these mistakes, you may find yourself deep in credit card debt once more.

Getting rid of bad spending habits should be part of any debt relief program. You need to begin by knowing how much you can really afford to spend. Ideally, using a cash only policy will help you stay within your means. But if you have to use credit cards, make sure that you have the cash in your bank account to pay for the whole balance on the card once the bill comes in. The only way you can eliminate the high interest on your cards while continuing to use it is to pay for it once the billing statement comes in.

Read all the fine prints indicated in the card contract that you will receive after applying for a card. Or if you lost that contract, research or call the credit card company to learn about the fees and charges associated with every activity on your card. And if you know that you cannot control yourself, try not to bring your cards when you go out on regular buying trips. This is how you become a responsible card holder.

Indications That Debt Consolidation Loans Should Not Be An Option

March 26, 2013 by editor

Getting a debt consolidation loan is an effective solution for your credit problem but you have to know the signs if it is not the right option for you. There are many debt relief options and the closest to a debt consolidation loan is debt management. If you want to enjoy the benefits of the loan but you lack certain qualifications, then you should opt for the latter.

So what are the signs that you should not choose debt consolidation?

First of all, you need a steady income to opt for this. A lender will not mind your application for a loan if you do not have this. It should not just be a steady income, but it should be able to cover your monthly payments. If this is something that you do not have, you will not have much luck with debt management too. Your best option will be debt settlement or another debt relief program that will help reduce your balance.

Another indication that debt consolidation loans will not help you is when you have low credit score. It is one of the factors that will affect the interest rate that will be placed on your loan. So if you have a bad score because you have defaulted on your payments already, check if you have a collateral to use on a secured loan. Either one of these will make you a low risk borrower and will prompt the lender to give you a low interest rate. If you have neither, then you should consider debt management.

If you are still incurring more debts, then you may want to forego debt consolidation loans. This is only for those who can stop acquiring more credit. Debt consolidation loans could make you believe that you no longer owe any debt because of the zero balances on some of your cards. Going into debt consolidation requires self restraint and hard work. There are instances when you will still incur debts such as when you are dealing with medical bills. Even if you opt to consolidate your loans, you will still incur debts after the fact. If this is the case, it is better to look into other forms of debt solutions.

One of the other things you should look out for when weighing the option of debt consolidation is when your income is less than your total payables. A high debt to income ratio is not something that can benefit this program. Debt settlement or bankruptcy may be the better option.

Lastly, if you know that you need an expert guiding you, then debt management may be your best chance to completely pay off what you owe. There is not debt counselor involved in debt consolidation loans. Making sure that your monthly payment is met will all be up to you. Controlling your spending to avoid incurring debts is something that only you can do.

There are other debt management options available for you if you seem to not qualify for debt consolidation loans. There are numerous other ways to pay off your monetary obligations and achieve financial freedom. But regardless of what you choose, you need to identify the reason why you got into debt in the first place.

Requirements For Credit Card Debt Consolidation Loans

March 15, 2013 by editor

As a debt relief program, debt consolidation loans can be an effective method – especially with credit card debt. However, like other solutions, you need to have the right requirements so you can maximize the benefits and make sure that you will really get out of debt.

The whole premise of debt consolidation loans is somehow self explanatory. You combine all your debts by taking out a loan. With the funds you will get from it, you will pay off your other credit obligations so you only concentrate on this one payment. Since most loan payments are stretched over a period of 5 years, you can expect that your monthly dues will be lower than before. If you were having problems keeping up with the minimum payments of your credit cards, this will be a welcome relief.

Another benefit that will contribute to lowering your monthly dues is connected to the interest rate. Depending on the type of loan that you will apply for, you should be able to get a low interest – at least if you have the right requirements.

So what are these requirements?

First and foremost, you need to possess one of the two qualifications for a low interest loan. One of them is a good credit score. Having a high score describes you as a low risk borrower so the lender is prompted to provide your loan with a low rate. The other qualification is a collateral. This is to allow you to get a secured loan – wherein interest rates are typically low. This is typical for debts that total to a huge amount. You can use your house, car or any high value asset that you have as your collateral. This is why part of your debt consolidation loan options is a home equity wherein you use the current value of your house as collateral for a big loan.

Any of the two will get you the low interest rate that will make your monthly credit obligations more affordable.

However, there is another important qualification that is usually left out – your attitude. More than the good credit score or the collateral, you also need to have the right attitude towards your debt to be able to conquer it completely. A lot of people fail at debt consolidation because they had the wrong attitude about it.

Your attitude should include determination, discipline and an extreme amount of self control. This type of debt relief program will not involve a debt professional who will monitor your payments and remind you to pay off your dues. All initiatives to pay, keep your spending low and maintaining your due dates will be all up to you. Once you have paid off your credit card balances with the new loan, the temptation to use it again becomes very strong. You need to curb this – otherwise, you will end up acquiring more debt.

While getting out of debt is important, you need to develop the right financial management skills so you can stay out of debt. That is just as important as your efforts to pay off all your credit dues. If you do not put enough attention to this, you may find yourself getting into debt once more.

These requirements are not mandatory but if you want to succeed in using debt consolidation loans as your credit solution, you need all of these (or at the very least, the attitude requirement).

How To Choose Between Debt Management And Debt Consolidation Loans

March 7, 2013 by editor

When you have decided to get rid of your debts, the next decision that you will make is how you will accomplish that. To make that choice, it helps to know the different qualifications that will allow you to successfully solve your credit problems. Some of the options have significant differences in terms of requirements while the others have minimal distinctions.

Two debt relief options that are more similar than the rest is debt consolidation loans and debt management. To help you choose between the two, let us discuss their similarities and differences. There are two factors to consider: process and requirements.

Beginning with the process, they both will lead to a single payment scheme. In debt consolidation loans, you will apply for a loan that is big enough to pay off your other credits. Once they are all paid off, you can only concentrate on the big loan. The effort exerted to monitoring different accounts can now be put into your efforts to grow your debt payment fund.

In debt management, you hire a third party company who will assign a counselor to help you come up with a payment plan. The debt counselor will negotiate with the creditor to allow you to lower your monthly dues by increasing the length of your payment period. For a minimal service fee, you will send the total amount of your monthly debt payments to the counselor who in turn, will distribute it to the creditors that you enrolled in the program. Since they are taking care of the details, you can also concentrate on growing your income so you have more to use on your debts.

Both of them will aim to give you a lower interest rate. However, this is more controlled with debt consolidation loans. Naturally, you will choose the loan that will give you a low interest rate. In debt management, you leave it in the hands of the creditor. The counselor will help you negotiate but there are no guarantees.

In terms of the requirements, you need to have a steady income for both of them. They will not reduce your debt balance like debt settlement. You will just be shifting your debts around so you can benefit from the single payment plan. The difference between the two is the additional cost required in debt management. You need to pay for the service fee of the counselor – who is helping you distribute payments and communicate with your creditors.

In debt consolidation loans, you need either a good credit score or a collateral so you can enjoy a low interest rate on the loan that you are applying for. These two requirements are not necessary to get a loan approval but they both will make you a low risk borrower. By being such, you can be given a low interest rate on your loan. If you are a high risk borrower, the lender has to protect their investment because the chances of you defaulting on your payments is more likely. A high interest rate will give them this security.

These are the main similarities and differences of debt management and debt consolidation loans. Choose based on what program you think you can finish. It is important to select the one that will help you learn your lesson. More than anything, you need to learn how to stay out of debt – even as you are paying off the current one. Regardless of your choice of debt relief, this is vital for you to truly achieve financial freedom.