If you don’t have any form of collateral and you need to consolidate all of your outstanding monthly bills, you may not be able to get approved fast – certainly not overnight. You’re essentially asking to have all your bills paid off with a completely unsecured loan – tough one.

Almost always, banks and private lenders will require SOME kind of collateral on their investment, so you are really “thinning the herd” of lenders when you don’t offer some form of collateral.

If you have allot of overdue bills piled up on your desk, or your kitchen table, you are likely feeling stress every minute of the day.

Being “in the arrears” is no way to live your life. You are doing the right thing by trying to get your outstanding bills cleared off in one fell swoop. You are doing the right thing by starting to at least do some research online.

Below is a table we have made showing a rather large pile of bills that need to be paid off by a recent applicant we had. The bills that were overdue, and those bills that were soon-to-be overdue. These were utility bills, television, bills, and telephone bills – just name a few. Notice that we have NOT included credit card bills for this applicant. This debtor does not have a single credit card.

See the entire list below, and then we’ll do the math on the bill consolidation.

No Collateral Bill Consolidation Loan – Table

The actual loan that was approved for the debtor is show below the table here;

The column which shows the amount owing for each service provider in arrears is the focus of our bill consolidation loan. After adding up all owed in bills it comes to a total of $16,089 in arrears. Just so the applicant/borrower can have fresh second-chance-start, we will round the loan up to $15,000.

It’s important to look at how much the total of all the monthly bills comes to. This is just a total of the bills at $1191. Keep in mind that this does not include a vehicle payment, a mortgage or rent payment, food, clothing, or entertainment. Perhaps getting a consolidation loan for your outstanding bills is just a healthy start in understanding the TRUE amount of money you need to be earning each month to “make ends meet” and stay “financially afloat”.

Now we can calculate the interest, principal, and terms of the loan.

Calculation of Bill Consolidation Loan

We will be using a fixed rate calculation for this loan, which would be normal under the circumstances. The lender or bank that approves this loan will know that is for the sole purpose of cleaning up outstanding debt on monthly bills, so they will want a fairly high APR – we’ll charge and APR of 11% on this loan. Don’t forget that the this borrower does not have any collateral either.

We will also assume the length of term to 3 years, and the payment schedule to be biweekly.

Principal Loan (mo. bills in arrears): $15,000
APR (fixed rate): 11%
Length of term: 3 years
Payment Schedule: Biweekly

Biweekly Breakdown of Bill Consolidation Loan

Now we see the final calculation of our debtor’s bill consolidation loan at the fixed rate of 11% for 3 years;

Total to be paid: $17,506.71
Total amount of interest $2,506.71
Payments: $223.83 (every 14 days)

So here we can see that our debtor has now cleaned up all their outstanding bills – paid their arrears in full. They are paying approximately $224 dollars biweekly for their consolidation loan, which equates to $448 dollars a month in one “easy” payment. Maybe not so easy, if they start spending more money than they make AGAIN.

Even though the APR is fairly high (as insisted on by the lender), the borrower can manage the payments.

Now there is no risk of the phone, water, electricity, cell phone, or natural gas being shut off! That is quite a relief.