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I Need To Consolidate $30000 ASAP – I Need A Good Debt Services Company

This consumer is actually pretty typical in terms of his credit card debt. He has a job as a waiter and is trying out for parts in various commercials in Hollywood etc. He believes if he is successful, his problems will be over, but in the mean time needs to address his $30,000 in credit card debt. He is looking for a good debt service company.

We calculated what his monthly payments would be over a 5 year term at 21% interest in the chart below. Not only are his monthly payments $200 a month more expensive compared to a personal loan with the same term, he is paying over $10,000 more in interest charges over a five year period. This really illustrates just how important it is to pay your credit card bills every month in full and not let the balance build where you begin to incur interest charges.

If this consumer can arrange for a debt consolidation loan at a much lower interest rate, he will save thousands of dollars over the five year term. It is really something that he should act on right away with the help of a debt service company.

His credit rating is not great, however he should be able to obtain a loan with a reasonable interest rate. He has been on time with all of his other expenses. His current credit rating is effected by the number of cards he has and the amount he owes. He needs to make sure that he does not miss any payments ever. Otherwise his credit rating will tank and make it very difficult to find a competitive interest rate debt consolidation loan.

It will still be difficult to meet the monthly payment of $500 plus a month in payments. If he is able to repay the loan without missing any payments, his credit rating will actually improve. Regular payments and paying a loan off with no missed payment dates, will reflect positively on all future loan applications. He will now have a positive track record which all lenders love to see. They want to minimize their risk as well and make loans to consumers who have an excellent track record of repayment.


Debt Consolidation VS Debt Relief Program – Pros and Cons

This consumer is having some difficulty with the amount of debt that he and his wife have racked up. They owe $49,000 mostly on credit cards which carry a very high interest rate. They have been meeting the monthly payments, however with the amount of interest they are charged, most of the payment goes towards interest charges and very little to reducing what they owe. This is pretty typical of credit card debt and most consumers who find themselves in this position. They want to know whether debt consolidation vs debt relief programs are better for them.

The straight forward answer is that for most consumers, debt consolidation is the better solution. Before we explain why, we will explain what each one involves so that readers have a proper understanding of each.

Debt consolidation involves negotiating a new loan at a lower interest rate and longer term usually. The rate and term will depend on the consumers credit rating and whether they can offer anything as collateral such as equity in a home for example. Their monthly payments will be much lower, their total interest paid will be much lower and more money will go to reducing what they owe each month. The proceeds of the new loan will be used to pay off their existing debt.

Debt relief programs involve hiring a company on their behalf to negotiate with the companies they owe money to. These companies will negotiate a lower total amount owed and hopefully a better interest rate, but not always. Again the terms depend on the consumers credit rating and the ability of the company they hired to negotiate for them. These companies that provide this service also charge fees for their service which is added to the debt that the consumer owes.

Debt consolidation is a great way to proceed since it demonstrates a consumers willingness to deal with his or her debt, they pay less interest, when it is paid off in the end your credit rating will improve and you have one payment to deal with each month.

Debt relief service on the other hand can result in lower amounts in total owed, however the credit card companies in this consumers example may file a report against their credit rating. This is a black mark on their credit rating which will impact their ability to borrow money for many years. At the very least consumers will pay higher interest rates if they can get a loan approved at all. These companies that perform this service also charge hefty fees for the service. While they may have less debt to deal with, it may not be worth the effort with the negative impact on their credit rating.

As we mentioned earlier, debt consolidation is usually the best approach to take.


$130,000 Consolidation Financing in New Mexico

This home owner is pretty typical of many consumers who need some financial help controlling their costs (interest paid) and also managing their monthly cash flow i.e. lower monthly payments. This consumer is well employed, has a decent credit rating and should have no problems being approved for consolidation financing in New Mexico.

Many consumers use their credit cards like cash, and pay them in full each month. The credit card companies reward these good customers by increasing their credit limit on their cards and next thing they know they are carrying a balance close to the new credit card limit. It can be pretty easy to pay a small credit card balance when it is under $1000, but once it climbs to more than that, many people just do not have the money readily available to pay the balance in full by the statement due date. That is when the interest costs escalate to 19% or higher and any money you save by buying items on sale is quickly lost in interest charges.

That is one of the reasons that a consolidation loan makes so much sense especially if there is equity in your home that can be used as security. A decent credit rating also helps to secure a loan with a low interest rate which can save thousands of dollars over the life of the loan. This consumer will be able to consolidate his car loan, his personal loans and his credit card debt into one easy low interest loan. They also want to borrow a bit more to use for renovations of their home. All of this can easily be accommodated and secured by the equity they have with their home.


My Debt Is Out Of Control – Should I Use Debt Relief or Debt Consolidation

The writer to this particular post has raised two really good questions. The first, should he use debt relief or debt consolidation, is a question that we deal with regularly on this blog. The other is a question that many people struggle with every day and that is how to get control of their spending to avoid racking up even more debt after they consolidate their debt or even obtain debt relief.

Most lenders will help with debt consolidation if the client meets the criteria that they have for lending money. These include sufficient income to carry the loan, a credit rating that shows that the client will repay the loan and a history of managing their debt. The writer to this post has indicated that he has trouble on all three issues and he may not be too attractive to a lender. His payments as shown below in the table, will take a large portion of his income. In terms of debt relief, there are no circumstances in this clients profile that would qualify him, unless he declares bankruptcy. He may need to meet with a financial counselor to help get control of his debt and his spending, which brings us to the second question.

This writer has already indicated that he has gone through the debt consolidation process at least once before and has just added more debt by overspending on his credit cards. Somehow he needs to get control of his spending and at the same time establish a plan to repay his current debt. A debt counselor can help with this kind of situation. However, the old saying still applies, You can lead a horse to water but you cannot make him drink. This client can be shown all of the things he needs to do to get control of his debt, his budget etc to avoid just getting into more debt. But if he does not apply all of the recommendations and guidelines, he will be applying for more debt relief or debt consolidation in the near future.


How To Find a Lender When Credit Score is Between 500 and 650

This consumer is looking for a $10,000 loan to help with the purchase of a small boat and wants to know how to find a lender when credit score is between 500 and 650. The following paragraph provides some information on credit ratings and what it means.

Lenders rely a great deal on credit scores to provide them with an indication of how trust worthy an applicant is regarding the repayment of a loan, mortgage or even credit card debt. A credit score of 750 to 850 means you have an excellent rating. Good credit is between 700 to 750 and 650 to 700 is considered a fair rating. Anything below 650 is considered poor to bad. If you are under 350 it means you do not have any credit rating. The national average is 687.

The lower your credit score, the more risk the lenders feel they will be exposed to. To compensate, they either refuse to lend money or they raise the interest rate of the loan. With a fair rating, most consumers will still be approved by lenders, however they will typically be charged a higher interest rate. This means that your loan will cost you more money than someone who has an excellent rating.

In addition to credit ratings, lenders also consider employment, time on the job, recent credit activity and other factors that each lender feels is important. Most consumers with a record of employment, a good record of repaying loans etc will be able to borrow money for a variety of purposes. If they are able to offer something as equity towards the loan, e.g. a boat this may improve their chances of being approved.

Consumers with bad credit scores can improve them, although it takes time and effort to bring it back into the fair or good area. The longer in time you go with no unpaid debts, a record of meeting all financial obligations, work history etc, the better your credit rating will be and the faster it will improve.


How To Consolidate $40000 Without Home Equity

Many consumers find themselves in the position that this writer has asked about. He wants to consolidate $40000 without home equity to use to secure his loan. A secured loan would give him a better interest rate and lower his overall costs for the loan. The chart at the bottom of this post shows the difference in the amount of interest paid for someone paying credit card rates vs. an unsecured loan and also one that is secured over a 20 year period. The period and interest rates were chosen randomly for illustrative purposes only, but are typical of what consumers would pay. There is over a $60,000 difference in the amount of interest paid over the term of this loan which is substantial. It illustrates why that you want to find the lowest interest rate possible.

A lower interest rate also affects the monthly payment significantly as well. There is over a $250 difference in the monthly payment between the highest interest rate and the lowest rate. Anyone can use $250 a month to pay bills etc as well as to pay off a loan more quickly.

Consumers should look for loans to consolidate their debt with low interest rates. While they will not find loans that are as low as secured loan rates, there will still be significant savings for them vs. credit card interest rates. While this consumer has a car loan which has a competitive interest rate, there is the advantage as well of combining all payments into one easy payment. He should remember that he likely will not have his car after 20 years and if he consolidates this debt he is in effect deferring payment on a depreciating item which is not considered the best approach.

Financially he would be better off consolidating his credit card debt with a low interest unsecured loan, keep his car loan separate and use the money he is saving to retire the car loan as quickly as possible.


How To Consolidate Debt Between $10K and $50K in 2015

This consumer has a very good question about how to consolidate debt. His total debt is $28 thousand consisting mainly of credit card debt at high interest rates. He does not have any equity to speak of other than the small amount of equity he has in his car. He currently rents and does not own any property for personal use or investments. He is looking for assistance in finding a debt consolidation loan. He has also asked us to keep this application general so that no one can link him back to his employer.

Many consumers find it difficult to consolidate their debt in these situations due to the fact that they are considered higher risk borrowers. They typically are only eligible for non secured personal loans at interest rates that depend on their credit rating. Consumers with excellent credit ratings can often qualify for personal loans with competitive interest rates. If your credit rating is not in the excellent category, these consumers will pay a higher interest rate on a personal loan due to the perceived higher risk associated with their lower credit ratings.

Consumers in this category, particularly with low credit ratings may often not qualify for personal loans at traditional lenders. As a result they often turn to payday loan lenders who charge very high interest rates and fees associated with processing the loan. Consumers would be better off just continuing to pay their monthly payments and avoid payday loans of this type. The cost of borrowing is just too high.

Debt consolidation loans in general are usually a smart approach to take, however as with most things in life, the devil is in the details. We urge consumers to do the math and compare their current costs with those of the debt consolidation solution. Don’t forget to include any fees that may be needed when you make the comparison. Once consumers have compared their debt consolidation solution, the monthly payments and the cost of borrowing a debt consolidation loan, consumers can make the right decision for their particular solution.

As a final note, regardless of what solution is settled on, consumers are encouraged to meet all of the terms of their loans to maintain and / or improve their credit rating and ability to borrow funds in the future.