Emergency Debt Consolidation Loans

In the USA today there are plenty of individuals that are working hard on paying off there debt’s, in both a speedy and affordable manner. Starting with one credit card that have a high interest rate to multiple credit cards to loans with extortionate rates, consumers are normally having to choose between carrying on with their monthly payments or using a different solution to realize their debt payoff goals.

It’s in this kind of situation Debt consolidation loans are one of the most effective ways to successfully accomplish the responsibility of improving poor credit, paying off debt, and making life much simpler from a money management standpoint.

Here is some suggestions and tips on how to proceed when searching for a Debt consolidation loan

  • Go with no less than 2 loan companies to apply at so that you can compare interest rates and other terms and conditions. The majority of loan companies do what is called a soft credit check which will not have an impact on your credit score.
  • Find the most suitable repayment period. A lengthy repayment period will mean you are paying more for your borrowing. A shortened pay-off period means that your monthly paying is higher which could consequently end up being stressful.
  • If you need a larger amount, the best solution can be to split the amount in two, and strive to acquire two loans instead of one. Often, it’s far simpler to secure a couple of smaller loans than a single large one.

What Should I do if my application for an Emergency Debt Consolidation Loan is declined?

Unfortunately, not every borrower will be eligible for an emergency debt consolidation loan when they first applied for the loan. However, it is always possible to reapply.

Listed here are some strategies that might be helpful for you to use in preparation for your next debt consolidation loan’s application.

1. Understand the Reason Why Your Application Was Declined

The loan provider companies usually have the procedure where they are obligated to send you the specifics of your application for a loan, this includes the reasons why your application is rejected. The reason for rejection varied from one applicant to another. However, most common reasons are due to adverse entries on the credit profile, too many debt obligations or the credit score is low.

2. Inspect Your Credit History Thoroughly and Fix any Errors
Gain access to your credit reports without any charge one time per year by visiting https://www.annualcreditreport.com or alternatively by writing to them.

If you find any issues listed on your credit report that might affect your loan application, make sure to use the dispute process to get those issues corrected. The process can be complicated; however, it is well worth it.

3. Improve Your Credit Score
Loan providers need to see that you have a good history of making your payments on time or that you do not max out your credit cards or that you don’t have lots of loans. Plus, they need to see that you have a range of different credit accounts which you are managing and repaying diligently. The preferable mix would be three cards, with two empty and one with as low balance as possible.

If you follow this strategy, it will help you improve your credit score, however, do not expect it to be changed overnight. It will take some time before the result could be seen.

4. Try Another Loan Provider
If you have previously been refused an emergency debt consolidation loan, however you believe that your credit rating is sufficient to qualify you to apply for the loan, keep your option open by trying to apply to a different loan provider. Each loan provider company has slightly different criteria as reference to establish whether the applicant is qualified or not.

5. Be Patient and Wait It Out
This is the hardest thing to do, however your last option if your application for an emergency debt consolidation loan is rejected to simply wait for a while. As time goes, and if you commit to your current loan payments and pay in a timely manner, your credit will eventually improve. Just make sure to apply all the strategies listed above and you will be good to go when the time comes to apply for your next application.

Guaranteed Debt Consolidation Loans

Opting for guaranteed debt consolidation loans might be tempting especially if one’s application for a loan has been declined. Truthfully, no loan provider company will be able to fully guarantee that any person will be granted a loan. Unfortunately, some form of credit checks is still required. However, every money lender company might have different criteria that can sometimes be substantial to help with your loan being approved. Some companies accept any applicants with above 700 hundred credit score while others might accept 550 credit score or even lower depending on the situation.

Debt Consolidation – The Advantages and Disadvantages

Every type of loan has its positives and negatives aspects. Debt consolidation loan is no exception. Here are the list of the advantages and disadvantages when you choose to commit to a consolidation loan.

The Advantages

The Payments are Streamlined
The borrower that opts for debt consolidation loan will enjoy the benefit of a single monthly payment. This help made monthly repayment easier especially if the borrower has multiple debts at the same time. For example, if you have four credit card bills to be paid each month, it means that you also have four different payment due dates and each with differing amounts to pay. This is not easy to keep track to. The debt consolidation loan’s single monthly payment method will make it easier for you to keep track of your monthly repayment and you don’t have to worry about missing any repayment’s due date.

Lowering Debt Costs
The borrowers could also enjoy a reduced cost of the debt that they are paying back by opting to debt consolidation loan. On average, the interest rates for the credit cards are over 15%. Most consumers pay out more than 20% of the outstanding balances each month. By limiting the interest rates, it will help bring down the interest fees applied to the remaining unpaid debt each month. This could help the borrowers save perhaps 100’s to 1000’s of dollars in the long run.

Credit Rating Improvement
This advantage is less known compare to other advantages of debt consolidation. This loan does help in improving the borrower’s financial status over time.

As the payments for the loan are paid at the set due date monthly without fail, the borrower’s credit rating will improve. For the borrowers who wants to settle their existing credit card bills with debt consolidation loan, the immediate increase in available credit also helps improve their poor credit by bringing down the credit utilization rate.

The Disadvantages

The Credit History Aspect
If one has a poor credit score, getting a combined debt consolidation with a reasonable interest rate can be quite challenging. This outcome will cancel out the advantage of a cost-effective debt repayment plan.

Lengthy Repayment Period due to Low Monthly Installments
Another disadvantage of debt consolidation loan is the repayment term offered on some forms of loans will be longer. It is true that a longer term of repayment would bring down your monthly fee. However, in exchange for the low monthly fee, there will be more interest fees have to be paid in the long run.

A High-Interest Loan Isn’t as Bad as it Sounds

You as the borrower need to consider all factors when a combined (debt consolidation) loan offered to you has a higher interest rate compared to what you expected. The loan provider companies will look at your income, your credit history, your saving account and in some cases, other assets to ascertain your eligibility for a loan. If such requirements are not met, a considerably higher interest rate might be offered.

If you are in that situation, your choice is either to hold back and wait until your credit score shows improvement and reapply when you are better qualified for a loan or just go ahead with the debt consolidation loan with a higher interest rate if your current debts are tough to manage or if you wish to have a single payment rather than paying each payment separately.

To Sum it Up

Making the decision to consolidate your debt is never easy. You will need to take some time to determine precisely which option for the debt consolidation is best suited for you, in what sort of position you are to obtain a debt consolidation loan or help from a debt settlement service, and what costs are involved with either option. It is also very important to be sure of your ability to commit to your monthly payments as you move forward and how long the repayment term for a debt consolidation loan will take.

To conclude, do consider your qualifying credentials for acquiring a loan, your need for a debt consolidation loan, and your willingness to keep your other debts to minimum before deciding to sign a new debt consolidation loan.

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