Loan Consolidation Service
A loan consolidation service assists people who have allowed their monthly expenses to exceed monthly income. This may have happened because of an ongoing or emergency medical issue or perhaps because of a temporary job loss. Or the situation may have gradually reached a crisis point where the resources are no longer available to juggle the household expenses with overwhelming credit card debt. Many homeowners have found themselves in financial difficulties as a result of variable rate mortgages. When the interest rate increased, the monthly mortgage payment also increased and caused difficulties for the family's budget. Any one of these problems or difficulties can cause a strain on a family's ability to continue to meet monthly obligations. By rolling all or most of the debts into one loan, the total monthly expenses may decrease. For example, if a family is paying out a total of $700 a month in a combination of credit card, student loan, and outstanding medical debts, the loan consolidation service can issue a new loan in the amount of the total of all those outstanding debts. With the funds from the new loan, the family can pay off the other loans and now make only one payment to the new creditor. Depending on such factors as the interest rate, the total amount borrowed, and the length of the term, the monthly payments may be only $300 to $400.
For a family that is experiencing economic difficulties every month, bill-paying can be an emotionally devastating time and a loan consolidation service may seem like a great answer to get rid of that anxiety. Conscientious individuals have a careful track record of meeting obligations in a timely manner and, because of their financial histories, they have very good to excellent credit ratings. When such individuals overextend themselves, they are embarrassed, frustrated, and sometimes panic because of the fear of doing anything that will lower the credit score they have worked so hard to achieve. Consolidating all the indebtedness may seem like a great idea for lowering the monthly commitments as seen in the example given above. One of the psalmists wrote that: "My mouth shall speak of wisdom; and the meditation of my heart shall be of understanding" (Psalm 49:3). Before consolidating debts in a panic, consumers should take a good, long look at spending habits and the family budget. Though consolidating debt through a loan consolidation service may have the temporary purpose of lowering monthly expenses, that relief comes with a price. The overall total of the debt with interest will most likely be more than the combined total of the current debt situation. Thoughtful consideration of the actual financial picture may show other options.
Consolidating debt with a loan consolidation service has a common drawback overlooked by many consumers. Except in those rare cases where overwhelming debt is caused by some kind of emergency, the indebtedness exists because the consumer is living beyond his or her means. Consolidating debt lowers monthly payments, true. But what happens when the consumer doesn't change his or her financial behavior? If the credit cards get maxed out again instead of cut up and the accounts closed, the consumer will be faced with the consolidated loan and additional debts. This is perhaps the primary reason why consumers need to carefully consider the budget, how they got into the poor financial situation now facing them, and what can be done to change the situation. Conservative financial experts recommend that consumers tackle debt problems according to a specific, written plan rather than utilizing a loan consolidation service that may only create more financial problems in the future. Again, most consumers have difficulties facing the reality of having to miss monthly payments on credit card or other debts. But a credit card score that goes down is only a temporary problem. Steps can be taken to raise the score back up again when the financial situation improves. And since overwhelming expenses are the cause for the financial anxieties, the consumer should not be taking on additional debt; therefore, the credit card score doesn't really matter. That rating is most important when making a large purchase such as a home or a vehicle. Those purchases, if needed, will have to wait until other debt problems are straightened out. Homeowners should especially be wary of consolidating their debts by taking out a home equity line of credit (HELOC) or second mortgage. The danger here is that the house is now at risk if the monthly payments cannot be made. No one wants to lose a home because of a poor decision on repaying credit card debts.
A loan consolidation service should probably be considered only under extreme economic circumstances instead of as a quick fix to overwhelming monthly expenses. However, many college graduates may find it beneficial to consolidate student loans. During college, many students (and sometimes their parents) take out several different loans to pay educational expenses. After graduation, the student is faced with paying back these loans which have varying interest rates and terms. Many financial institutions offer a consolidation programs that places all the debt into one loan with a single interest rate. The student will want to utilize the online calculators available at some of these websites to determine how student loan consolidation can lower monthly payments. Some loans have a fixed rate interest while others have variable rates tied to some index. The student should also be aware that consolidating the student debt may mean a longer term before the complete debt is repaid. A student loan consolidation service may offer special programs, such as reduced interest rates, for borrowers who set up automatic payments through a checking account or who show a track record of making payments on time. Online applications can be completed and approved in a short amount of time. The convenience may outweigh the drawback of a longer term, but the applicant should never sign a contract that penalizes pre-payment of the student debt.
Is Debt Consolidation A Good Idea?Many people debate the question is debt consolidation a good idea, as this question will be one that many people may ask as they struggle with bills and payments each month. The process of consolidating debts allows the debtor to take all loans and other similar obligations and basically sale them to a lender who will repay the balance on these loans. The debtor will then have one single payment and interest rate to pay to that lender. Determining when and if this service and process should be considered will take much thought on the part of the consumer. The personal and financial needs of the individual must be taken into consideration before making any major financial decisions.
First, the consumer needs to understand just what debt consolidation consists of. Typically, a consolidation loan pays off all or most of the consumers existing financial obligations leaving them with just one monthly payment. Ideally, this payment is lower than what the individual was paying for all of the other loans, because the interest rate is lower and the length of the loan is longer. If a person has a lot of high-interest credit card debts, the answer to "Is debt consolidation a good idea?" is usually "Yes."
One of the biggest problems with this plan is not so much with the loan itself, but with the deceptive feeling of freedom that comes from having "paid off" all those loans. Instead of changing their spending habits and working extra hard to pay down the one consolidated loan, many people simply start the cycle all over again. They open another credit card account, finance another car, charge another vacation, etc., and dig themselves even further into more debt. So, is debt consolidation a good idea? Not if the consumer does not simultaneously address the spending issues that got them into the position of owing a great deal of money in the first place.
If a consumer calls or speaks with a banker or other lender and asks, "Is debt consolidation a good idea?" the individual must be aware that some representatives work on a commission basis. Such representatives may be motivated more by their potential profits than the consumers financial well-being. Proverbs 1:5 says to seek godly counsel, "A wise man will hear, and will increase learning; and a man of understanding shall attain unto wise counsels." With this in mind, perhaps the best course of action is to discuss the situation with a respected, Bible-believing Christian for help and understanding in this issue.
Interest free debt consolidation companies offer consumers the option of repaying their unsecured credit card debt through a repayment plan. This type of plan involves negotiating with creditors to eliminate the interest charged on the unsecured credit cards. Interest free debt consolidations can save a consumer hundreds of dollars in interest, in late fees, and in over the limit fees. This type of financing is geared toward those individuals that desire to sweep their finances clean by beginning anew without discharging their financial burden through a personal bankruptcy.
An opportunity like this can be a godsend to someone facing an uncertain financial future because of foolish credit and spending habits from his or her past. Interest free debt consolidations can be used to rid a person of debt from credit cards, store credit, personal loans, lines of credit, and medical bills. This type of financing will not be useful to consolidate mortgage or car loans, as they are not considered unsecured credit. This route will enable anyone to regain lost ground and get back on solid financial footing. The important thing is to start on that route right now.
Many loans are available for perusal over the Internet and have interactive web sites that will allow a person to talk to a counselor, respond to a financial questionnaire, or submit financial information. Most of these Internet based interest companies are secure, using state of the art encrypted information technology. Interest free debt consolidation programs are also easy to use and simple to find. A web search will turn up hundreds of companies, many of which will fit specific needs. Many interest free debt consolidations organizations are available twenty-four hours a day, seven days a week. They are very accessible. Statistics say that over two million people have been helped with a debt consolidation loan. That many customers can't be wrong.
In the book of Deuteronomy 23:21, the Bible says that when a person makes a promise, they should not be slack to repay it. Interest free debt consolidation can give someone the tools to repay what is owed while at the same time providing a debt-free status that will allow a person to be in control of personal finances. Interest free debt consolidations companies offer many tools for regaining control over cash flow and also enable a person to live a debt-free lifestyle that will brighten a financial future considerably.