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.