Debt consolidating loan htm
You in turn pay the "bill paying service" a monthly payment equal to the amount of all your accounts in the plan, plus a service fee, and maybe interest if they could not get all of it removed.
This should hopefully cost much less than your total payments before, since most credit cards will drop the interest rate to 0.
You must ask your financial institution for a loan equal to the amount of your total outstanding debts that are currently due.
In most cases, the financial institution will settle all the debts for you and, in return, the only monthly payment you will have to make will be to them.
Usually car loans, home loans, and other secured personal loans cannot be brought into this type of plan because the bill paying service cannot get banks to relax the interest.
This type of plan usually works best on credit cards, gas cards, and other types of credit.
A consolidation loan should only be considered if the interest rate is less than all the credit you owe AND you close out all of the accounts you paid off.
Consolidation loans are DANGEROUS for impulsive people because all you are really doing is shifting all your debt from one place to another, effectively OPENING ANOTHER CHANNEL OF CREDIT, while freeing up your credit cards.
This option may be suitable for debts such as those relating to credit cards, public utilities or other consumer loans.Notice that no one is lending you money, they are just restructuring your debt, which is safer.Don't confuse these companies with lending institutions, or banks, they are not lenders.In order to qualify for a consolidation loan, a consumer usually needs to have an acceptable credit rating and sufficient income to demonstrate that they will be able to manage the loan (that is to say, to demonstrate they will be able to make the monthly consolidation payment, in addition to paying for their regular monthly bills and expenses). A blemished credit rating will likely diminish your ability to secure a consolidation loan, therefore it is best to act as soon as possible (please refer to Credit and Credit Repair for more information).It does not cost anything to apply for a loan in order to consolidate all your debts. Inquire at the financial institution that you choose.
A debt consolidation loan is a single loan (generally from a financial institution) that allows you to repay your debts to several or all of your creditors at once.