It goes without saying that debt management comes with several complexities and it can all turn really overwhelming for consumers. The best way to deal with such a situation is to opt for a strategic approach and this is where credit card consolidation comes into action.
Those who are new to the whole consolidation process, this is where you need to be. Today we are going to talk about debt consolidation in detail, its pros and cons and whether or not it’s worth it for you.
Understanding The Term “Debt Consolidation”
In simpler words, debt consolidation means that you combine all your debts into a single loan with a lower interest rate and an easier payment process. With multiple debts, you’ll have to pay multiple interests that’ll keep changing every month. Now, if you do the math here, you’ll see that having multiple debts really increases your overall monthly payments and it can take a dig at your financial situation.
The situation can get even worse if you don’t pay your monthly dues on time. Late payments or missed payments come with several unwanted consequences, especially the fact that your credit score will suffer a lot. Considering it all, it really makes sense to just combine all your loans and make a single payment every month and this exactly is what debt consolidation is all about.
Factors That Make Debt Consolidation Just The Right Option For You
Debt consolidation loans aren’t for everyone. To be clear, it’s not some magic wand that’ll help you become debt-free overnight. In fact, it’s a strategic move and you have to play carefully here. For example, if you opt for a credit card debt consolidation loan, get the funds, pay off the rest of your lenders with those funds but still end up taking more loans then this clearly will worsen your financial situation and you’ll end up in a bigger, deeper debt.
Here are some signs that indicate that you should apply for a consolidation loan as soon as possible;
- Your bills and expenses exceed your income
- You often forget to make one or more repayments every month
- Your expenses are under control but still your debt isn’t going down
- You are eager to become debt-free as soon as possible and can easily commit to a long term plan for it
What To Consider When Choosing A Lender For Bill Consolidation?
If you are new to this whole “loans with bad credit” situation, this is just the right place for you. One of the most important things that can literally make or break your whole consolidation journey is your lender. Here are some things to consider when choosing the one to consolidate your bills with;
- Reputation In The Market
When you start making your list of lenders to consider, check for reliability and reputation at all costs. You can gauge all such information through reviews and ratings online. Most importantly, check the reputable financial websites first and do some research on your lender to check his authenticity.
- The Eligibility Requirements
Before rushing to fill out the application forms, make sure that you meet the lender’s eligibility criteria. Every lender has his own set of requirements for loan approval. For example, some will consider your credit score and some might even do a hard inquiry of your background including your income threshold.
- Compare Different Lenders
In a financial crisis type of situation, people often rush into making their decisions. Now when looking for the best credit card to rebuild credit, you should first compare your lenders and check which one comes close to your set of requirements.
- Loan Terms
Always remember that the longer your repayment term is, the higher the total interest cost will be. If you really wish to save some money on this journey then always go for the shortest repayment term and never fall for excessively longer terms.
- Additional Fees And Interest Rates
In order to avoid any unexpected additional charges, always ensure to read the fine print of the terms and conditions of your lender. Choosing the lender that offers the lowest interest rates is the trick here. You just need to do thorough research and look for a competitive interest cost.
- The Type Of Lender
Look for a non-profit lender who won’t be making any money out of you and instead will be helping you genuinely become debt-free. Some sort of a community developed financial institution or a credit union can come in handy to you here. These NGOs are specifically for the vulnerable consumers who really want to get out of debt without any hassle. These platforms are more ethical in their dealings, they show more concern towards your problem and they are quite consumer-friendly. If you are lucky enough, you can find a lender who won’t just lend you the amount you need but will also educate you on how to make informed financial decisions to avoid any debt in the future.
Signs Of A Debt Relief Scam
When looking for debt relief programs, just make sure that you don’t end up getting scammed. It’s quite unfortunate but it’s a fact that there are people and organizations out there waiting to take advantage of their customers who are suffering from financial distress especially those who are new to the consolidation process. Here are a few signs that indicate a debt relief scam;
- When they ask you for any money upfront, know that it’s a scam. Reputable and authentic debt consolidation organizations don’t ask for any money before they provide you a service.
- If something sounds too good to be true, it probably is. Like if the repayment term is excessively long or if the interest is shockingly low then you have to beware as scammers use these tactics to lure consumers into their fraud schemes. Everything appears too appealing initially but then when reality hits, it’s too late to recover the money you’ve lost and you can’t blame anyone for it other than yourself.
- You can always tell the difference between a good marketing strategy and an aggressive sales tactic that just feels like the other person is literally pressurizing you into making a quick decision. Beware of such organizations and save yourself from getting scammed.
Overall Verdict
Merging all of your debts into a single monthly payment really is the solution when you are struggling with multiple repayments with different interests every month. Again, debt consolidation is not just a tactic where you take more money from a lender to pay off the rest of your creditors. In fact, it’s just a strategic approach that makes debt management easier and more efficient. Just use it wisely, make your repayments on time and choose the lender that suits your requirements the best. If you commit to your consolidation plan, you’ll gain complete control of your financial situation and ultimately you’ll be debt-free in no time!
Looking for the best debt relief program to sort your financial situation? Try Mountains Debt Relief and you sure will be impressed with what they offer!