debt consolidation loans

How Debt Consolidation Loans With Bad Credit Can Solve Your Financial Problems

It is an unfortunate truth that more and more people are struggling to meet their monthly debt repayments, and that an increasing number are applying for bankruptcy. But there are more constructive solutions to this problem and, in many respects, seeking a debt consolidation loan with bad credit is more desirable.

The reason that bankruptcy should be a last resort is that the consequences can be severe and last a significant length of time. This is mainly because it involves writing off debts without actually repaying them. But consolidation makes clearing debts immediately more practical, and with no great damage to a credit reputation

But as with all loans available, there are conditions to getting debt consolidation loans, and securing the right terms is essential if the exercise is to be of any real benefit.

Consolidation Explained

So, what exactly is consolidation, and how can getting a debt consolidation loan with bad credit be of any really benefit to a borrower? While some might say taking on a new loan is a negative move, the benefits are pretty clear.

The key concept behind consolidation is that funds are secured to buy out the existing debts in one go. By clearing debts immediately, and replacing them with a single, more cost-effective and more manageable debt, the pressure to meet repayments is lessened.

Simply put, 4 individual loans will each come with 4 individual interest rates that together prove to be more expensive than a single interest rate on a single loan would be. So, a debt consolidation loan can be used to lower the pressure to meet monthly obligations.

Key Advantages of Debt Consolidation

Of course, while making monthly repayments easier to meet is a definite advantage, there are more benefits to be enjoyed. For example, even getting a debt consolidation loan with bad credit presents an opportunity to achieve an improved credit score.

This is because repaying any debt affects the credit report, and ultimately improves the credit score a borrower has. By clearing debts immediately, the improvement can be significant with 3 or 4 or 5 loans all being repaid in one go.

However, there is also a significant improvement in the debt-to-income ratio of the borrower. Depending on the terms of the debt consolidation loan, the monthly obligation can fall by as much as 50%. In some cases, the term of the loan is a lengthy 30 years. This slashes the size of the repayments, thus increasing the excess income available.

Choosing The Right Debt Consolidation Program

So, how can an applicant find the right terms, and the right consolidation program? Well, it does depend on your specific debt, but the good news is that securing a debt consolidation loan with bad credit is not a major feat. After all, the purpose of consolidation is to help bad credit borrowers anyway.

Qualifying for these loans comes down to criteria that are similar to those for regular loans, but there is usually an insistence that full-time employment be held for at least 6 months before submitting the application. The advantage of clearing debts immediately makes the wait (if necessary) worthwhile.

And like so many financial products, the best place to get a debt consolidation loan is online where a selection of professional debt consolidation companies can be found. However, check their terms and conditions closely as a fee is required for their services, which can affect the effectiveness of the consolidation agreement.

Debt Consolidation Loans With Bad Credit: Solving Financial Woes In One Fell Swoop

The pressure created through quickly mounting debts can cause real chaos. It does not take long for creditors to begin to demand payment, and unless something is done to deal with the problem, bankruptcy becomes a real possibility. So what is the solution? Well, it is not difficult to secure a debt consolidation loan with bad credit, and to clear the troublesome debts in one go.

The challenge of clearing existing debts, and lifting the weight that can cripple even the hardest working of us, is no light matter. It usually requires great discipline to take control of debts, making it extremely difficult to achieve independently.

A precisely tailored consolidation plan can make a real impact, and a debt consolidation loan provides the means to restructure the money owed into something that is manageable to handle. But how is this possible, and what are the terms that should be sought?

How Consolidation Is The Answer

Applying for a debt consolidation loan with bad credit is a good decision, but it may seem strange that a new loan can actually make your debt situation better. Knowing how consolidation works is the best way to ascertain the effectiveness of the strategy. In its simplest form, consolidation replaces multiple debts with a single loan, thereby removing the complexity and lessening the burden.

The biggest problem with multiple loans and debts is that they each have their own terms. So, 5 loans will have 5 different interest rates and 5 different repayment dates. That means the amount of interest is higher than it needs to be, but clearing existing debts with a single loan means a single interest rate is paid.

And even the principal if the debt consolidation loan is $50,000 to buy out the individual loans, the terms can be much better than those original debts combined, making it much more affordable than the original deals.

What Terms Should Be Sought

Of course, applying for a debt consolidation loan with bad credit is one thing, but securing terms that make it worthwhile is another. By and large, lenders offering consolidation packages are willing to offer very flexible terms, but the key issues are the interest rate and the loan term.

The interest rate can be quite low, but what is most important is that the rate is significantly lower than the average rate charged on the existing loans. That way, clearing existing debts and replacing them with a new loan can be accomplished while making savings – as much as 50% on monthly repayments.

Crucially, however, it is the size of the loan principal that makes the biggest impact, and this is where the loan term comes in. With 5 loans to pay each month, the total sum could easily reach $1,500, but even a $50,000 debt consolidation loan repaid over 10 years could be half that amount. The longer the lifetime of the loan is, the lower the required monthly repayment.

Considering a Consolidation Company

When it comes to applying for a debt consolidation loan with bad credit, there are two chief options. The first is to approach a lender (traditional or online) and apply for a loan large enough to clear existing debts. While securing a large loan might be difficult usually, if the purpose is known to be debt consolidation, approval is more likely.

However, there is no guarantee of approval and this means that the problems might only persist. Another option is to approach a debt consolidation company, professional service providers who will buy out your debt and then receive monthly repayments directly.

Of course, this option is a little more expensive as there are fees to pay on top of interest on the debt consolidation loan. Still, the cost is manageable, and progress in lifting the debt is certain to be made.

By: Mark Venite

Debt Consolidation Loans With Bad Credit: Clearing Debts With One Affordable Payment

Due to the current economic climate, the number of people with mounting debts and plummeting credit ratings is growing all the time. In fact, bad credit lending experts have never had it so busy. But what if the debt has become so much bankruptcy is looking attractive? Applying for debt consolidation loans, with bad credit a feature or not, is a popular solution.

The whole concept of consolidation is to provide a practical method of clearing debts immediately, leaving a clean slate from which to rebuild your credit reputation. But while this route is designed specifically for those in worsening financial situations, not everyone can qualify for consolidation.

Like all financial offers, there are conditions that must be satisfied first. However, with the right debt consolidation loans, with the correct loan terms secured, the chance of sustained financial recovery is very strong. That way, the same problems can be avoided.

What Is Debt Consolidation?

It might seem on the surface as though seeking a debt consolidation loan with bad credit is little more than taking on another loan. The fact that existing debts are proving too difficult to handle suggests securing any new loan would only be foolish.

But consolidation is not about taking on another debt – it is about replacing existing debt with a more manageable debt. Consolidation means clearing debts immediately, with a single loan and then repaying that loan in monthly sums that are significantly less than the original repayments.

For example, a debtor may have 5 loans with 5 different interest rates. The combined monthly repayments might add up to $1,000. However, through a debt consolidation loan, all of these loans are paid off, with the new loan requiring repayments of just $400 per month.

Benefits of Choosing Debt Consolidation

For those who successfully secure a debt consolidation loan with bad credit, the benefits are almost certain to ensure their return quickly to a strong financial position. However, it would be a mistake to think that the debt is simply gone. It is more accurate to say it is restructured.

It is true that clearing debts immediately has a definite positive effect on the financial situation, but more important is the potential long-term benefits that exist. For example, with each debt repaid, the credit report is updated, and the credit score is adjusted accordingly. With 4 or 5 loans cleared in one go, that means the credit score jumps significantly.

Another benefit is that extra cash becomes available. A single interest rate charged on the debt consolidation loan helps lower the expense, but through a longer repayment term (in some cases 30 years), the size of the repayment sum is much lower. Therefore, the repayment sum is much more affordable.

Qualifying For A Consolidation Program

But what is needed to qualify for a debt consolidation loan with bad credit? And how can an applicant be sure to secure the best possible program terms? The criteria are pretty basic, with applicants needing to be over 18, to have a reliable source of income, to be full-time employed for at least 6 months and be a US citizen.

Since clearing debts immediately is the purpose of the loan, there is little worry over debt-to-income ratios, but lenders will consider the degree of improvement consolidation will actually have. If the improvement is not much, then the application may be rejected. This, however, is extremely unlikely.

Finding a lender willing to grant debt consolidation loans is pretty simple too, but getting the best terms usually means looking online. There are also professional consolidation companies but they are more suited to clearing very large debts, and will charge a fee.