Take Control of Your Finances With Debt Consolidation Loans
One of the leading reasons that individuals apply for debt consolidation loans is their desire to get rid of high interest credit cards and other loans that may carry higher rates. With monthly payments that often barely cover the interest rates, which can increase at any time, credit cards account for a large portion of consumer debt and monthly cash flow. The payment on a credit card can change every month as long as consumers continue to use the credit card to purchase items. Since they already are carrying a balance on the card, the 20 day grace period no longer applies and they start charging interest on the new items as well. It can be very difficult to repay in total all of the funds owed on a credit card due to the high interest rates. Aside from car loans, debt consolidation loans are probably the most popular type of loan that consumers are applying for.
Consumers want to take control of their finances, improve their cash flow, pay a lot less interest and consolidate their debt into one low interest rate loan all at the same time. Just making one payment instead of several greatly simplifies everyone’s life and there is much less risk of missing a payment as well. We will take a quick look at each of these issues in the following paragraphs.
Improve their cash flow – a debt consolidation loan usually means lower monthly payments since the interest rate is lower and sometimes clients will extend the payment term into a longer period. This has the effect of lowering payments each month leaving more money for other things in the budget. Of course they can also pay this extra money towards the loan as well and discharge it early. Consumers should be aware that they will pay more interest for a longer term loan than they would for a short term loan. In addition a short term loan will have a higher monthly payment since you are paying your loan off more quickly.
Pay a lot less interest – credit cards are typically 18% with store based cards up around 28%. These rates can be crushing in the amount of total interest that consumers are forced to pay on any unpaid balances. Personal loans can be obtained for much lower rates depending on whether they are secured or unsecured. We have seen some loans as low as 5%, however it varies a lot by lender and also depends on each consumer’s credit rating. With a poor or bad credit rating, consumers will find it more difficult to find a lender willing to lend money to them and if they do the interest rate will be higher as well. In most cases the interest rate charged will be lower than credit cards.
Consolidate their debt into one low interest rate loan – when you take all of your debts and consolidate them into one loan, clients will only have one payment to make and they will pay lower interest rates as already mentioned. The loan can be a personal loan or it could even be part of a mortgage on your home that has been consolidated with the remaining mortgage into one easy payment. This makes life a lot simpler since you do not have to be concerned about making multiple payments and possibly missing a payment. With no missed payments, there will be no penalties and no impact on your credit rating as well.
Take control of their finances – consumers can take control of their finances by minimizing the interest they pay to lenders and credit card companies. If you do not take the action to help yourself, no one else is going to. These companies would rather have you continue to pay the high interest rates to them because that means more profit for them. There is really no incentive for them to initiate debt consolidation. Financial advisers will review your savings portfolio and your debt load and may recommend that you consolidate your loans and credit card balances. However most consumers will not even have a financial adviser and must depend on their own knowledge and information to make the right decisions.
Brokers can Assist Consumers Borrowing Money
Consumers and business people need to take back control and initiate discussions about debt consolidation with their lenders or discuss these issues with new lenders that you might find through a broker. In fact brokers can be one of the best resources when it comes to debt consolidation. They are constantly aware of who has the best interest rates and who has money to lend. Consumers who are looking for a personal loan would do well to borrow money for a personal loan through a broker. Brokers typically do not lend money. They connect lenders with potential customers.
In addition brokers do not charge a fee for their services to the consumer. Instead they are paid a finder’s fee by the lender for bringing a qualified client to them. This is part of the business and the way it has worked for years. If a broker is trying to charge a fee for their services, look for another broker. Take control of your debt consolidation today and merge all of your debt and credit card balances into one low interest loan. The broker will prequalify you so they will need all of the typical information that a lender might ask for. Based on this information, they will prepare an application for you to review prior to sending the information to lenders they know have competitive interest rates and are likely to be interested in lending money for all purposes including debt consolidation.
Can a Broker Help Arrange a Line of Credit
The answer is yes, since this is really just a specialized type of loan that some lenders will offer. A line of credit is a special loan that can be drawn on at any time up to a predetermined maximum, repaid in full or in part at any time and then drawn on again when needed. A line of credit is excellent for people who are planning renovations for example and will have irregular payments to make, with some being too large to handle from their regular paychecks. Most lenders request that the minimum payment is the amount of interest calculated monthly. Of course much larger payments can also be made at any time. A line of credit loan is an excellent tool for arranging for debt consolidation since it has lower interest rates than credit cards and payments can be made at any time.