Tuesday, June 19, 2007

Debt Consolidation....... Some things to consider.

You have probably heard of loan consolidation at some point. I remember the first time I consolidated my debt. I actually went to the student financial counseling center on campus(which I recommend seeking out on your campus), and getting a lot of good information, particularly deadline dates to apply for consolidation. I didn't know a date existed, but it does. Let's go over some things about debt consolidation according to Consumer Action:

What is Debt Consolidation?

Debt consolidation may be an answer for some people that have credit problems. Debt consolidation involves borrowing enough money from one lender to pay off all your debts.

When you consolidate:

-You make only one payment each month, to the new lender.
-You will usually pay out less money each month.
-You usually pay more money in finance charges to consolidate debts.
-You make payments longer.

Before you decide to consolidate your debts, look at your other choices:

-Talk to your family members about the problem. See if you can lower expenses or raise income.
-Seek financial counseling (on campus, or elsewhere). You can go to a credit counseling service. They may know a solution you have not thought of.
-Call your creditors to see if you can work out some change in monthly payments that will ease the pressure. The creditors may be willing to adjust payments.

*If you do decide to consolidate your debts, shop around. There are different places you can go, such as banks, credit unions, and finance companies.

Before you choose whom you will get the loan from, find out the following information from each place:

-The charge for the service.
-The annual percentage rate (APR).
-The amount of your monthly payments.
-How long you must make payments.
-What the total amount is that you will pay.
-What happens if you miss a payment.
-What happens if you are late making a payment.

Potential Problems:

Making only one payment a month may make you think you are better off than you actually are. You may be tempted to buy something else on credit, and before you know it you could have an even worse problem: too many bills with too little income.


Be sure to seek out your on campus financial counseling center if one exists, or a counselor at the financial aid office to see what your options are. Generally your original lender who issued your loans will most likely be the one to consolidate your loans because they don't want you taking your borrowed money elsewhere. Keep in mind that now is a good time to consoldiate while interests are low.


Hunkston said...

When someone is dealing with money troubles it is easy to lose control and end up creating more debt while trying to pay off existing debt! If someone finds themselves in a situation were they are living outside their means they should get some advise from professionals who can help them with their problems and assist in implementing a debt consolidation programme.

Susan said...

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jennifer white said...

i really enjoyed reading this article, thus i found i found it quite interesting. All i can say is that being in debt married or single or even worst divorce is bad. You must by all means get out of your debts because it will hunt you for the rest of your life. I was in debt once, and i recall how terrified and lonely i felt because there was no way i could repay all that money specially with the interest rates rising so quick. I joined this company that helped me: Best Debt Relief Company and they helped me. There was no upfront fee and they offered both debt settlement and debt consolidation. They advised me and helped me pick the option that would be in my advantage.