I Got A Debt Consolidation Loan – Now What?
This consumer has an unusual request compared to many of the consumers we see on this website. He has already been approved for a debt consolidation loan and is wondering what he should do next? Most people we see on this site are looking for loan approvals for various kinds of debt situations.
He will receive the funds from the lender in the next 24 hours and they will be deposited into his bank account. We will list the next steps for this consumer. Although some may be viewed as obvious, we wanted to provide a complete list for everyone:
- Pay down all of the debt on each credit card immediately
- Arrange for auto payment of the new loan if this is not already done
- Reduce the number of credit cards to no more than two
- Eliminate credit card accounts if you are paying a fee
- Cancel the credit card accounts that you will not be using
- Credit card companies sometimes increase limits when you pay off a large balance – call them and ask them to keep the maximum amount at no more than $3000 for your own protection
- Make it a priority to always meet your monthly payment obligations on all debt and utilities to maintain and improve your credit score
- Get into the habit of only purchasing items when you know you have the money to pay the credit card statement balance in full when it arrives. If not, do not purchase the item until you have sufficient funds.
- Track your expenses so that you know exactly where all of your money is going
- Set up a budget that covers all mandatory expenses (debt, food and shelter), living expenses and nice to have items
- Reduce your spending if your budgeted expenses are larger than your income
This may seem like an onerous list, however it is the best way to avoid financial difficulties in the future and also maintaining an excellent credit score. As soon as you run a balance on your credit card interest charges begin to accumulate and your debt problems grow.
Regarding cancelling credit card accounts it is not enough to just stop using them. They still show against your credit score. You need to call the credit card company and actually cancel the account once you have a zero balance. Deciding which credit card accounts to cancel is a bit more difficult depending on the type of account you have.
For example some accounts charge an annual fee and provide a number of benefits that might be valuable to you depending on your lifestyle. In general cancel accounts that charge an annual fee first. Cancel store based credit card accounts since they sometimes can have interest rate charges as high as 29%. Next cancel accounts that have the least value to you in terms of benefits. If you do not travel then you probably do not need travel insurance etc. Some credit card accounts provide cash credits at the end of the year. You probably will want to keep these to collect these credits.
In general get rid of those credit card accounts that have the least value to you and cost the most to maintain.
DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION
Home/Mortgage Loan Amount :: $8,500
Home Loan Application and Processing Speed (when do you need the funds):: don’t need a loan, just need help on what to do next
Do you currently have a mortgage? :: yes
Bank Name and Branch :: City National Bank, Oceangate
What City/Town, State and County do you live in? :: Long Beach , California
Zip :: 90802
What is your employment field? :: Hospitality
Employment Position :: Steward on the Queen Mary
When are you paid? (monthly/weekly/biweekly):: Biweekly
Your credit rating to be – excellent, fair, or bad? :: Fair
How did you find us? :: Looking online for answers on how to consolidate debt.
How are you paid? (direct deposit/paper check):: Direct deposit
Gross Amount Per Paycheck :: $2000 plus tips
Do you agree to have this information published online, without your PRIVATE information of course? :: Sure, maybe it will help other people
Extra information here please (some detail):: I recently applied for a debt consolidation loan and was approved for the loan. Now I am wondering what to do next to make sure that I do not have this same problem all over again. What should I do next?
I had three credit cards with all of them charged up to the maximum. Fortunately for me the limits were set low, around $3000 or I could have had a much larger debt problem. There was a variety of things charged to them which in the end just began to add up and it got out of control. I could not pay off the balance on the statement date so they charged the standard credit card interest rate of 19%.
The lender approve the debt consolidation loan application and should be sending the money to my bank account in the next 24 hours. What I want to know is what do I do next now that the loan as been approved. Obviously I should pay off the credit card debt and will set up an automated payment for the loan, but are there other steps that I should take relating to this debt consolidation loan.
Note to Lender :: Although it really does not matter at this point, I will provide with some history in terms of employment and income. I am a ships steward on the Queen Mary, which is moored at Long Beach as a tourist attraction as also operates as a hotel. This is a really great place to stay and has a great deal of history associated with it.
I have worked here for quite a few years and have met many people from around the world. I receive a base salary as well as tips I earn from customers. It has worked out well for me and I enjoy the steady income and also the extra money I can make from tips.
Although I am not applying for a loan, I would appreciate any tips that you can provide about what I should do next with regards to my debt consolidation loan.