Loan consolidation, The Facts:
We all know the pressure that debt can put on our shoulders, the barrage of phone calls from Debt collection agencies, the letters and threats of 'further action', court summonings, visitors to the house, etc. They will hound you until you pay back every penny, including the sometimes extortionate rates of interested added on top of that. No matter if you call them to tell them you cannot afford to pay the full amount they require, perhaps due to the recession, redundancy and the financial crisis at present - that doesn't matter to them. Money is all they care about.
With this knowledge, you can get yourself out of that financial rut. There are often conflicting reports on IVA's or Debt and loan consolidation so here you will find out exactly how it works and the best way to go about it.
Firstly debt consolidation will ALWAYS look better on your credit rating than bankruptcy. After using a debt consolidation service your credit rating will still be low, but you will be able to build this back up agian over time, unlike with bankrutpcy.
Debt or loan consolidation is the first step to managing your spiralling debt. Loan consolidation can arrange methods and ways to organise multiple loans or debts in a way that makes them easier and simpler to pay. Rather than gaining interest on 3 or 4 different loans or debts and paying them different dates, times of the month or year, to all different companies can be confusing and difficult to track efficiently. Also, we have to think of the issues that some loans and debts have completely different interest rates - for example you have one loan charging 22% APR, one charging 17% and one charging 25% per annum - this is a waste of time any money. So, loan consolidation will a combine all these loans or debts into one and try to negotiate an overall interest rate for them all at once, saving you money. You can then monitor this with ease as there is only one interest rate to take note of.
What do the companies get out of this? They will contact all your debtors and make an arrangement with them on how to pay all of these off. The debt/loan consolidation company will then pay these for you - in form of another loan which you will then pay off with one fixed interest rate; one loan instead of your old 4 or however many. They will make money from the interest on the loan they have given you. So it works out well for everyone as you will save hundreds or thousands in interest and you will have a lower monthly payment than you had before.
It is also worth noting when searching for a debt consolidation agency that the better companies will offer you credit counselling. This will be in form of advice on what credit decisions to make in the future so you will not find yourself in this situation again. They should also be able to provide you with advice on how to rebuild your credit rating.
Happy money saving.
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