debt consolidation

The DOs and DON’Ts of Debt Consolidation

July 17, 2014 by illinois

If you are looking to get rid of your debt, you might not have thought of taking out another loan. These loans, called debt consolidation loans, can potentially pull you out of a sticky financial situation. Below, you will find what you should and should not do when making this important decision.

The DOs

DO know your FICO credit score, and DO get your credit report.

Your ability to get a loan, as well as your interest rates, are based on your FICO credit score. The three credit reporting agencies of the United States, Experian, Equifax, and TransUnion, are required to provide you with a free copy of your credit score at least once per year. Below are the ranges for credit scores, and what they mean for you.

300 to 499 – Very poor credit.

500 to 579 – Poor credit.

580 to 619 – Low credit.

620 to 679 – Average credit.

680 to 699 – Satisfactory credit.

700 to 850 – Excellent credit.

If your score falls above the “average” range, it will be easier for you to apply for loans. This is because you have shown that you pay off your debts in time, and have probably never before defaulted on a loan.

DO keep in touch with your credit card company.

If you have a high credit score, make sure you contact your credit card company to see if you can lower your interest rates. You might be surprised at what they can do.

DO seek advice.

Credit counseling agencies are places that offer advice for rates that are typically low, and affordable for the average person. After making sure your agency of choice is reputable, you can go in, be assigned a credit counselor, and have another opinion on what to do next with you finances.

DO talk with your mortgage holder.

If you are having trouble paying your monthly mortgage, your mortgage holder may be able to help. If he or she has a good reputation, he or she can probably extend your payment term until your money is, once again, stable.

Another idea to consider would be refinancing your loan, which could lower your payments based on your home’s worth. It’s surprising how much money you could save, with just a short meeting.

DO get rid of debt.

One of the downsides to taking loans is debt, which should be paid as quickly as possible. If you feel it would be feasible, try to set the monthly payment on your loans as high as possible in order to avoid elevated interest rates and prolonged payment periods. Paying ahead of time, too, is a common action of many responsible loan holders. In essence, paying more in the beginning can save you hundreds down the road.

DO get the best deal.

Don’t just take the first offer you find. In order to find the best option, you might spend a few weeks “shopping around,” comparing initial payments, interest rates, and payment plans. Only make a final decision after you have examined the offerings of three or four different lenders.

The DON’Ts

DON’T neglect other options.

Before you sign a loan that holds a payment plan of seven to ten years, you might want to take a look at your current financial situation. If you’re not in a bad place, you might want to take into the thought the option of what banks call “snowballing” your debts, or paying them off as fast as you are able. To do this, you should pay as much as possible on the debts that have the highest interest, while only paying the minimums on those that don’t have as much. Some people who have done this have become debt-free in less than two years.

DON’T do balance transfers without research.

While your balance transfer card might offer a 0% APR at first, be aware that the rate could skyrocket to over 20% over the course of a few years. This is not a problem if you have paid off your balance before that time, however it could spell danger if you are not aware of the length of the low, introductory rate.

DON’T sign up for any management plans.

While getting a credit counselor is a good idea, don’t allow them to convince you to sign up for a debt management plan. These can often extend your payments to five years or more, and might cost you all of your credit cards.

DON’T take from your life insurance.

More often than not, pulling money from your life insurance could make for higher taxes and, as a result, more debt than the amount with which you began. Also, you are denying your beneficiary money that might be more than needed in the future.

DON’T get the wrong loan.

There are two types of debt consolidation loans: secured and unsecured. Secured loans, like second mortgages and home equities, are held by an asset that can be taken if you do not make your payments in time. Unsecured loans, like normal mortgages, do not put any of your property at risk.

In all, be wise about what you do and do not do with your debt consolidation loans. As long as you are willing to take the time to find the option that is the best for you, you can find yourself happy, free, and out of debt. Stay on top of your finances, in order to keep them from getting on top of you.

Cash Advance Debt Consolidation

February 23, 2014 by illinois

You might want to take out cash advance loans as they do seem like the right option for your cash needs on a short term. The claim of these loans is usually that they will help us in times of financial needs and that it will help you to save up some cash for times of needs but the truth is a bit different. These cash advances are really not as convenient as they might seem and they usually get you under high debts that are hard to pay off.

The Loan Debt Trap:

If you take a cash advance loan, you end up getting deeper into debt. The term debt trap means that you think you’re making things easier for yourself taking an advance cash loan but it’s a trap because in the end it’s also a debt. So you’re piling them on yourself. At the end you end up paying more than what you initially did.

High interest rates are the reason for making cash advance loans a debt trap. Cash advance loan needs a payback in a very little span of time like a about one or two weeks. On your final due date of the advance loan you have to pay back the whole amount plus the fee added. The high fee is tricky and difficult part.

Different lenders have different free. Most of them have like thirty dollars on every hundred dollars you lend. As per the lenders demand, this fee varies mostly in range between $10 – $30 for every $100 dollars. Dome lenders have higher rates unless they are stopped by legal authorities.

A range between 300%-800% is the annual average interest for these cash advance loans in most states. If you don’t pay the full amount you pay the fee and extend your repay a week or two.

Getting out of the trap:

Once you have ended up with some cash advance loans you start thinking about how to get out of it and balance your financial situation. Cash advance loans have full repayment at once which makes it differ from credit cards and some other types of loans.

Luckily there are solutions available to get you out of this hard condition. The first step towards getting things right is by cash advance debt consolidation.

This procedure starts with discussing with the creditor. Because of the very high amount of fee it is likely that in the end of payback of your loan you pay more than the total amount of the loan. At that time, you will need someone to help you out getting back on track.

Cash advance debt consolidation through discussion begins with requesting for lower fee and a step by step repayment plan. Payday lenders are required to accept this request and accept a gradual repayment plan for you. So you can get the situation on uphill from here by professional negotiation.

Negotiations can proceed with making a payment plan or lessening interest by requesting a settlement. A settlement works by requesting a lesser principle amount. With loans, you are prone to wind up paying great past the beginning rule regardless of the possibility that you repay it back in two months. Settlement can help you figure out how to clear the debts without further inconveniences by making an arrangement that makes the loan affordable

Benefits of Consolidation and Settlement:

As soon as you decide that cash advance debt Consolidation and settlements are the best solution for you, you will start getting benefit from it.

The most prominent benefit is that you get debts that’s are more affordable and will help you get out of this whole scenario. for instance if you have fallen for a debt trap promising quick cash you need help to get out of that. Consolidation and settlements will help you to get out and beyond of the debts while the solutions remain affordable for you.

Another advantage is that your credit score gets higher. You will definitely have to start working hard on maintaining a good credit score but as soon as you start the settlements, the rating will start increasing and improving almost at the same time. a negative effect if there for a short time period and will eventually improve with every month that passes. When you get the debt pay backed you can start focusing on other bills that’s will start making your score better and improve.

Cash advances can no doubt be difficult to cope up with once they get huge and out of control. But for your advantage, there are two things named as consolidation and settlements which can help your situations and in the span of a short time all you’re problems will be solved and hence you can be debt free of cash advance loans as well as other debts you may be under.

Ways to Solve Your Debt Problems

September 26, 2013 by illinois

The most prevalent trouble that people are involved in is called debt. Your debt problems can cause many problems with a relationship as well as both physically, emotionally. There are many times that people don’t even realize there are options to help overcome your debt problems.

Ways to Reduce Debt Problems

There are many ways that people will talk about reducing their debt problems. However there are a few well known options that can offer the most success. There are companies designed to help you through you debt problems. These debt management companies offer several options such as

Debt Settlement
Debt Consolidation
Renegotiation
Bankruptcy

Each person must decide for themselves which program that can help their debt problems the most. Using a debt management company can offer benefits that you could benefit from. A credit counselor can help you assess your debt as well as help you to find a solution that fits your budget. They can help through creating a budget to help you learn what you can afford. They are able to negotiate on your behalf to the creditors to help a person reduce their total debt. This can decrease your required monthly payments. Several of the options involve a counselor taking your payment made to them and dispersing it to your creditors based on an agreement.

Debt Settlement

A debt settlement is one of ways to end your debt problems. A debt settlement is when you use a third party to negotiate with your creditors. The third party can help to reduce your debt and can offer settlement options based on what’s best for your budget. When it comes to debt settlement your creditors can pick one or two options. First they can either compromise on a settlement which will be less than what they wanted. The alternative is to lose the entire debt, this happens when a person has been unable to fix their credit and they file for bankruptcy. For this reason you creditor are able to work with your debt management counselor to reduce your debts up to 50% sometimes. This is one way to ensure that your debt problems don’t hurt your credit any further. This is one of the fastest ways to become debt free.

Debt Consolidation/ Debt Consolidation Loans

Debt consolidation programs are another way for someone to deal with their debt problems. This form of debt management can also be handled by a management company. This is different than a debt settlement. Debt consolidation is designed to reduce payments or payoffs. The debt management counselor will also act as your negotiator in this situation. After principals, interest, and fees have been lowered the counselor will act as the in between. An account is set up for you to place your monthly payment into and the debt consolidation company will then disperse the payment amongst your creditors.

A debt consolidation loan is very similar to participating in a consolidation program and can help with your debt problems. The debt management company will help you to reduce the debt you owe your creditors. Rather than having an account and letting them disperse the money, you obtain a loan that’s used to pay off the negotiated debt amounts. This will combine all of your debts into one payment, by leaving you with one debt. This loan can be lower interest than any of your current debts. Another positive to gaining a consolidation loan is that there are no negative effects to your credit.

There are some drawbacks to working with a debt consolidation company, and the Federal Trade Commission suggests against it. There have been cases where the management company has not made the payments on your behalf, or paid considerable fees that weren’t necessary. Remember that you should always be cautious and research the company that you choose to use to help you with your debt problems.

Renegotiating

When looking into renegotiating with you creditors to help reduce your debt problems it is important to have a goal in mind. The purpose of renegotiation is to reduce your interest rates to a very low number compared to your current interest rates. These interest rates can commonly be the main cause to your ever increasing debt problems. It can be troublesome to try and negotiate on your own, however it can be done. New terms and even new policies can be implemented in order to allow you to make your payments on time.

Bankruptcy

This option someone thinks about only if all other avenues have been exhausted. Fixing debt problems with bankruptcy can cause you to have a lot of negative repercussions. You will have bad credit for 7 to 10 years with little to no chance of recovery.

Be sure that the option that you choose is the one best suited for your debt problems.

Understanding Debt Consolidation Lenders

September 18, 2013 by illinois

It is important to look for debt consolidation lenders before you have any credit problems to get the better deal. The idea is to group all your existing debt into one payment, and that payment should reduce the monthly payments that you are making. This will make paying off your debt cheaper. The interest rate should be lower meaning that the total overall debt will be reduced than if you had done nothing.

To get the best rate from a debt consolidation lender then you need to have a great credit report, this will ensure that the loan that you are offered will have the lowest interest rate possible.

What Is A Secured Loan?

A secured loan is a loan that is tied to an asset; it can be a car or your home. If you fail to pay the loan then the debt consolidation lender can sell that item to pay off your loan. If it is your home then you will find yourself homeless and it will not matter if the value of the home is higher than the debt, they are just looking to recover the costs and you will not be entitled to the difference it will be sold off. It is possible for your home to be sold off for a fraction of the amount that it is worth.

What Is An Unsecured Loan?

An unsecured loan means that you do not have to lose the possession of your home or car if you default on the loan. But what you will face is higher interest payments. The risk is higher that you will default and this is then reflected in the rate of interest that will be offered if you are accepted for the loan. The better your credit report the lower the interest rate that you will be offered.

Being Approved

It is important to realise that if you are looking for a consolidation loan that the companies are going to think that you are having problems with your loans at the moment, meaning that they are going to see any consolidation loan as a higher risk loan.

The debt consolidation lender will look at your position carefully and will need to assess if you can afford the loan. It will delay the time that it takes for the loan to be processed. They will want to study your credit report to see if there are any problems that could indicate that you are a high risk of default.

You might be asked to provide some information and this can include:

The last few years tax return
Financial statements from your bank
Application for credit
Proof of your income

They will want to know about ay debt that you already have including:

Credit card debt
Personal loans
County court judgments
Car loans
Mortgage payments or rent

It is possible that if you are approved for the loan that they request certain conditions that will need to be adhered to otherwise you might be asked to repay the loan sooner. Those conditions can relate to the closing of credit cards after they have been paid off.

The debt consolidation lender must prove that they have taken your circumstances under review and that you can afford to pay the loan and that they haven’t made your financial situation worse than it already is. This is called due diligence and is sometimes used as the reason for the credit being rejected.

Bad Credit

It is possible to obtain a consolidation loan even if you have got a bad credit report. It will reflect badly in your circumstances and it will mean that you will need to pay higher interest rates than if you had a great credit file. It will have a negative impact on the product that you will be offered. You will need to check that the loan will pay off all your debts and will be cheaper than if you continued paying them individually. It has been known that a debt consolidation loan to have higher interest rates than what you have got already. So it is important to have this information to hand and to make sure that the product that they are looking at offering you will in fact save you money each month and not make the situation worse.

Make sure that the company that you choose to do business with is a respected company and that they are going to help you. Some companies are better at helping than others and it is important that you are able to research the company to find the best one for you.

Therefore if you are considering getting a debt consolidation loan that you have all the information from your debts so that you can compare the product that is being offered. You are looking at reducing the payments and the interest that you are paying.

Go Through Debt Relief Without Making Your Life Miserable For It

June 16, 2013 by illinois

Debt has the power to restrict your life and make it miserable – unless you do something about it. The causes of debt may vary but the results are usually the same. It can rule your life in such a frustrating way that it can discourage you from pushing further with your payments. With the difficulties of paying off your debt, you can’t afford to ruin your disposition over all the restrictions. This is why you have to make sure that you still take time to have fun.

Of course, this is easier said than done. Your limited income will keep you from spending on your entertainment activities. You have to prioritize your debt payments after all. However, that does not mean you cannot shift your debts around to help you finance even a few fun activities.

One of the first things that you have to do is to find a debt relief option that will not restrict your budget too much. Most of the debt solutions can do that. But, you may want to choose the program that will not damage your credit score. It feels so much better if you can pay off your debts without damaging your credit report. If that is your sentiment, then you are better off with debt consolidation.

The main effect of this program is to lower your monthly payments so you can free up your funds for other things – like your fun activities! The decreased payments happen because you distributed your funds over a longer payment term. There is also the chance to lower the interest rate of your debts.

With a lowered debt payment requirement, you can budget the freed funds to finance some of your fun activities. But even if you have a budget, make sure that you have set aside some savings (if you haven’t done so yet). Your savings will serve as your financial security net and that eliminates a portion of your stress. We all know how stress can contribute to making your life miserable too.

Now that all of that is discussed, let us proceed to find out how you can have fun while you are in debt.

There are many cost efficient ways to have fun. If you like hanging out with people as enjoyment, you can invite friends over or suggest having dinner in one of their houses. Everyone can contribute by bringing food and you all have an instant feast! Or you can grill in your backyard and have a picnic in your garden. There are many ways to have fun with friends without spending too much money on expensive restaurants.

On weekends, you can drive the whole family to the beach. Public beaches do not cost a thing and if there is a beach near your home, you don’t have to spend too much on accommodations. If you are far from the coastline, go to the nearest lake. The country is filled with opportunities for water activities. The key is to find one that is nearest your home so you don’t have to pay for accommodations.

Surviving debt involves creativity so as to make sure that you will not be discouraged. Find out ways to have fun but remember to stick to your budget at all times.

How To Achieve Financial Stability Through Debt Consolidation

June 8, 2013 by illinois

Financial stability is downright better than financial independence. The latter is a state wherein the consumer can afford to provide for their present needs without borrowing. The former goes beyond that. To be truly financially stable, a person has to have enough to support their current expenses while at the same time, having the funds to finance any unexpected incidents that require it.

The key to achieving financial stability is to grow your savings. Of course that is easier said than done.

Being in debt while aiming for financial stability may not be the easiest feat to accomplish because you are torn between paying off what you owe and growing your reserve fund. Most of the time, you are compelled to send every penny towards your debt payments just so you can truly be free from it. However, you need to understand that your savings must be given attention too. But for that to happen, you should have more than enough to cover for both your debt payments and your basic necessities. If you have limited resources, that may be very difficult to do.

Fortunately, there is debt consolidation. While the other debt relief options like debt settlement and bankruptcy can lower your monthly payments, they will cost you a good credit score. If you want to be really safe about it, go for consolidating your debts.

But how does one achieve financial stability through debt consolidation?

The simple solution lies in the decreased monthly payment that this debt relief program can provide. By distributing your current balance over a longer payment period, the monthly contributions can be lower than the current payment scheme. That means, there will be funds freed for other expenses. Given your intent in becoming financially stable, these funds will go to your savings.

The great thing about this lowered payment is that you will not be penalized for it. You either gain the approval of the creditor for the new payment scheme (debt management) or you have paid them off and you are now following a lower scheme with another lender (debt consolidation loan).

Another reason why financial stability is more possible with debt consolidation is the fact that you will adapt a new method that requires a single payment. This means you don’t have to spend too much time on monitoring your debt payments. After all, one payment is not so hard to track. This ease and convenience will allow you to exert your efforts into other activities like finding ways to grow your income. By doing so, you are increasing your extra money. As you increase your finances, you either have more amount for your debt payments or you can grow your savings faster.

In the end, you will realize that financial stability requires taking care of both debts and savings. Debt consolidation can take care of both without a problem. Through this method, you are setting yourself up for a debt free life that does not require as much clean up as the debt relief alternatives that ruins your credit score.

How Can A Frugal Budget Be Partnered With Debt Consolidation

June 4, 2013 by illinois

Frugality is something that people must adapt if they want to get out of debt – at least temporarily. In fact, there are some debt relief options that require a frugal budget to make it work.

Debt freedom requires some sacrifices and to be able to get out of it faster, you may want to maximize your debt payments. That could mean making a few severe cutbacks on your budget to compensate for your limited resources.

A frugal budget means you are living on bare necessities only. This means all of your entertainment activities will have to be cut off (or at least only one or two of the cheapest will remain). It also means you will keep yourself from spending on new clothes, new shoes and from dining out. Since you will be living this way, it is best to only apply this type of budget for a short period.

This is why a frugal budget is best partnered with one kind of debt consolidation – balance transfers. As a debt solution, this involves getting a new card where you can transfer your high interest balances to. You have to pay 3% of the debt amount as a balance transfer fee to make this debt solution possible.

These balance transfer cards usually come with an introductory promo period that provides the cardholder a low or zero interest rate. The debtor enjoys 6 – 12 months of this interest arrangement wherein every payment that they make will be towards the principal debt. It allows them to maximize their income so that they debts will be lowered significantly.

This is where a frugal budget can be of great help. By living on a frugal budget while going through this period, the debtor can maximize their debt payments. Despite the strict regulations on your spending, you should be able to survive this because at the back of your mind, you know that it will only be for a short time.

Some people cannot implement this type of budget because the restriction is too much. Most of them may start using it but they falter in the midst of it. You can say that it is similar to a crash diet. Very few really come out successful and sometimes, they end up worse than when they started. This same concept is applicable to a frugal budget.

You want to make sure that if you apply this in your life, you know when it is going to end. Sometimes, knowing how long we have to make the sacrifice helps us complete that painful period. This is the main premise why a frugal budget is best partnered with a balance transfer debt solution.

After the promo period of the balance transfer card, high interest rates usually take effect. Make sure that you are ready for this. You can actually opt to live on a frugal budget even after the promo is over or you can start to loosen the restrictions. In any case, you should keep the budgeting habit with you. That will help keep you from accumulating any more debt that could threaten your financial security once more.

How To Keep Late Penalty Fees From Piling Up On Your Credit Card Debt

May 28, 2013 by illinois

One of the enemies that will keep you buried in credit card debt are the late penalty fees. There are many reasons why you can be late on your payments. You may have forgotten them or mixed them up with another account’s due date. Or you simply do not have enough money to pay off all your minimum requirements and thus you had to default on some of them.

Regardless of the reason behind defaulting on payments, one thing’s for sure, you can expect an average of $35 to be added on your next month’s bill. That amount plus your current balance will be the basis for the interest amount that you have to pay on top of that sum. Sounds unfair right? Well that’s how credit card companies get rich.

So here’s the solution: never be late on your payments. Do not waste anymore of your limited resources in paying extra towards your credit card. It’s easier said than done but there are ways to help you achieve this – and it goes beyond merely being organized.

Debt consolidation is a great way of making sure that you will never have to pay for late penalty fees again. The single payment plan that you will be subjected to will keep you from confusing one payment for the other. In debt management, you get to work with a debt counselor who will literally manage your debts for you.

At the beginning of the program, you will come up with a debt management plan that is based on your payment capabilities. You will enjoy a lower monthly payment because your current debt will be stretched over a longer plan. When this new plan is approved by the creditor (which usually happens because there is no actual debt reduction), you get to make a single payment towards your debt counselor. They will take charge of distributing your payment to the different creditors you enrolled in the program. They will make sure that the payments will come on time – thus eliminating late penalty charges.

On the other hand, if you use the other method of consolidating debt, you erase the late payment fees because you completely pay off your credit card debts. Debt consolidation loan involves applying for a loan that is big enough to pay your other debts. Once paid off, you will concentrate on this one loan – thus making payment a whole lot easier. If you use a personal loan, you can get a low interest rate if you have a good credit score. This will help make your monthly payments smaller. But if you do not pass that requirement yet you possess a collateral, you can get a secured loan – which is ideal for the low interest that it provides borrowers.

These are great options to make sure that your debts will no longer increase because of late penalty charges. Of course, practicing proper financial management is also a good habit to develop. These include budgeting, saving and making smart purchases. If you practice this, you can keep your finances in order, boost your financial safety net and you will keep yourself from making your debt payments worse.

Is It Possible To Save While Paying Off Debts?

May 25, 2013 by illinois

Some people think that they should choose between saving and paying off debt. Well here’s the thing – you need to do them both. No matter how small your extra money is, these two are equally important and choosing to not act on one of them could lead to financial disaster.

In all honesty, your question should not revolve around what needs to be prioritized. The more important question is, how can you save while paying off your debts? This is where debt consolidation comes into play.

Let us look at the facts here.

If you choose to save and ignore your debts, you will suffer from the high interest rates, penalty charges and even the possibility of a lawsuit. This is mostly true if you have a lot of credit card debt – which is the third biggest debt amount that consumers owe in this country. It will keep on piling up the longer you refuse to send payments to your creditors. By defaulting on your payments, you will be endangering your personal possessions from being taken away from you. For instance, secure loans like mortgage and car loans gives your lender the right to take your vehicle or foreclose your home. Ignoring your debts, not paying them off and pretending they will just go away is the worst thing that you can do.

On the other hand, if you choose to just send everything to your creditors and lenders without leaving anything for savings, you are also in trouble. Let’s say your disposable income can cover your debt payments without a problem. What if, something happens to your job to compromise your main source of income? What happens to your debt payments now? Also, how will your family survive? Or another scenario is a health condition. What if you found out that you need an expensive medical treatment? Will you put yourself further in debt just so you have the money to pay for medicines and medical care?

Both are equally important but another case in point is, what if your limited income cannot cover both your savings and your debt payments? That is how debt consolidation becomes a perfect option.

This type of debt relief option works to provide debt ridden consumers with a low monthly payment plan. You are not really reducing your debts so you don’t have to worry about the creditor not agreeing to the new payment scheme. You are merely distributing your current balance over a longer payment plan. In some cases, you end up paying more interest amount but given your limited resources, you really have no choice. If you are lucky to be granted a low interest rate on your new payments, then it will bring your monthly requirement even lower.

This lower monthly contribution will allow you to make room for your savings. The thing is, you don’t have to spend forever splitting your disposable income towards the two. As soon as you have grown your savings into an amount that can be an adequate safety net for you and your family, you can use all your extra money on your debt payments. That way, you make more significant contributions towards your debt to expedite your debt freedom. This time, if anything happens to your income or an emergency expense crops up, you don’t have to worry about defaulting on your debt anymore.

What Is The Process Involved In Debt Consolidation Loan

May 19, 2013 by illinois

Sometimes, all it takes to be debt free is to find a systematic way of paying it off. The come-what-may attitude may get you deeper into debt and no where near your financial goals.

Any debt relief program is systematic. With debt consolidation loan however, you have to be careful because there is no professional assisting you unlike the others. This is why you have to know the process before you can successfully use it to your advantage.

First of all, you need to be able to make the minimum payment – or at least, only have a small deficit to it. Once you conclude you are able to make minimum payments, here are the steps you need to take to make debt consolidation work on your favor:

Step One: Self Realization
Accept the fact that you are in debt and figure out how much you really owe. This is a crucial step for you to move forward. You need to tally all the payments you are making monthly to find out the amount you are paying off on a monthly basis.

Step Two: Do the Math
Once you know the full amount of monthly loan payables, look at the nature of each for interest rates paid and if there are any prepayment penalties in the the event that you pay off your loan. This is a good decision point if getting a debt consolidation will be beneficial for you. It will also guide you in shopping around for the best lender.

Step Three: Explore the Lender Market
You need to look for a credit lender that will offer the best deal for you. But do not send out too many applications. This could and will backfire on your credit score. Shop around trustworthy recommendations or do the research on your own. A lower interest rate offered by a lender might lead to savings for you down the stretch. Prepare income documents as well because this will be the basis of lenders in taking a gamble on lending you money. They need to be convinced that you have the ability to pay off your loan.

Step Four: Go Back to the Main Objective
Once you find the right lender at the best rate, remember your main goal in choosing debt consolidation – to pay off all your debts and to manage one payable a month. It is much more simpler to remember one payment a month rather than juggling five debts each with different due dates, different interest rates and different penalties. As soon as you get the funds from your lender, pay off all your loan and close all credit cards. You can choose to keep one open in case of emergency.

Step Five: Pay Off the Debt
This is too important that reminding you again seems just right. You might have the temptation to use the money elsewhere. This mentality will get you deeper in the red.

Step Six: Do an Attitude Check
Probably the clincher of all the steps and another crucial understanding is attitude adjustment. Look at how you got into paying a lot of debts in the first place and steer away from that mentality. You might think that you now have less payments because you are just paying one debt a month. Falling into this false sense of security might encourage you to spend again and again. The next thing you know is you are in a lot more debt than from the time you started debt consolidation.

These steps will help you make the most out choosing debt consolidation loan in achieving a debt free lifestyle.