How Debt Consolidation Loans For Bad Credit Can Solve Financial Heartache

The pressure that can build up when trying to control mounting debts can be so great that bankruptcy seems to be the only answer. But it would be unwise to file an application unless it is completely necessary. But how can anyone deal with the problem? Well, a debt consolidation loan for bad credit management is probably the best option.

There is no doubt that getting a loan to clear existing debts is effective, but it is as important to get good terms on these loans as it is to get good terms on a normal loan. The challenge then is to find a lender offering low interest consolidation programs.

This is where the effort put into searching for the right debt consolidation loan company can pay dividends. But the starting point for all bad credit borrowers is to ensure they know where they stand before beginning the search for any loan.

How Consolidation Loans Work

The workings of consolidation may be a little confusing, but in fact the concept is very straightforward. Basically, all of the various debts are clumped together into a single sum, and bought out with a single loan. Therefore, the advantage of a debt consolidation loan for bad credit borrowers is principally that it creates a chance to restructure debts completely.

The issue with having several individual debts is that there are separate repayment sums with different interest rates due on different repayment dates. It can mean the pressure is practically constant. However, with a single loan the array of concerns is kept under much better control.

What is more, a low interest consolidation program means that the interest paid each month is much lower than the total combined interest paid for the 4, 5 or 6 individual loans. And, if the debt consolidation loan term is long enough, the size of the repayments can fall to as much as 50% of the combined total of the original repayments.

Check Your Credit Status

When starting to seek a company that grants debt consolidation loans for bad credit borrowers, the first thing to do is find out your actual credit situations This means getting a copy of your credit report and looking at the official score, and the reasons it was calculated.

There is always the chance that a score is inaccurate, with recent loan repayments perhaps not being noted, and sometimes even the full clearance of a debt. It is important that, should anything seem to be missed out, that the score is reviewed. Addressing the score can help in securing a low interest consolidation program.

If the score is accurate, then the information is valuable anyway since it is the key to assessing the terms of the debt consolidation loan. Remember, any consolidation company will look to buy out your debts completely and then receive repayments back, so the interest charged is important too.

Factors To Consider

It is not always necessary to find a company, with some lenders willing to provide debt consolidation loans for bad credit management purposes. However, this can depend greatly on the sum required, with large loans harder to secure from independent lenders.

Of course, as with all loans, providing some security can all but make approval certain. This can mean providing collateral, such as car or home equity. However, it is better to find a cosigner – someone that guarantees that monthly repayments will be made. Getting a low interest consolidation program is therefore easier.

However, when considering a lender, make sure they satisfy the highest standards set by the Better Business Bureau. Check their grade on the BBB website, and only choose an A+ lender for a debt consolidation loan.

Credit Card Cash Advance Or Payday Advance?

People will always have some reason for needing cash that they do not have. It does not always have to be an emergency such as unexpected expenses in between paychecks. It could also be because they want buy big-ticket items or go on a grand holiday. For whatever reason, two of the fastest ways to get funds is through credit card cash advances or payday advances.

Both have its advantages and disadvantages. It all boils down to the borrower’s ability to pay. Below is a comparison between the two options:

§ Payday advances have a higher interest rate than cash advances from credit cards. The $10 to $30 finance charge per $100 borrowed may not seem too much to pay at first, especially if the borrower is able to pay off the loan after two weeks. However, if the borrower cannot pay on the deadline, the finance charge is compounded for every week that the loan is unpaid, a rate of increase much faster than for credit cards.

§ Credit card cash advances can take a longer time to pay. The usual practice of credit card companies is to apply payments to any existing balance first before paying off the cash advance itself. Unless the payment is large enough – certainly well over the combined minimum payment for the current balance and the cash advance – it will take a long time for the borrower to make a dent on his credit card debt.

§ Payday loans have no effect your credit history. Because the terms are quite short and the loan is guaranteed against the borrower’s next paycheck, payday advances do not contribute to or detract from your credit score. This is unlike credit card cash advances, which are included in your credit history.

§ Borrowers get cash faster with payday advances than with credit card cash advances. There are usually less requirements, no faxing of documents and credit history checks, making the loan process faster and the loan guaranteed, more or less. On the other hand, credit card cash advances are subject to credit history checks and is not guaranteed.

Based on the pro’s and con’s listed above, fast cash loans, like payday advances, seem to be the better choice over credit card cash advances. However, the borrower has to keep in mind that fast cash loans are short-term loans only and should not be used as a long-term financial solution. It is better only if the loan is sure to be paid on or before the deadline.

If the borrower is not sure that the loan can be paid in two weeks, a credit card cash advance would be better because of the longer period for payment. However, one should not make a cash advance on a card with a large balance or, worse, maxed out. People should avoid maxing out their credit cards because it becomes harder to pay several of these at once. In the end, only the borrower can decide which of the two options – payday advance or credit card cash advance – is more suitable for the situation.

How Credit Card Debt Settlement Makes Debt Repayments Easier

Most of us recognize just how damaging credit cards can be when they are not managed properly, worsening financial situations and negating what convenience they might otherwise offer. Clearing the debt can be a daunting task, but adopting a credit card debt settlement plan can ease the strain.

Every year, tens of thousands of Americans find themselves facing huge debts created solely by credit cards. When 4 or 5 different cards are involved, the debt can be $50,000 or more. Along with common personal loans and the cost of keeping a home, clearing existing debts can look impossible.

But a structured card settlement scheme provides a practical framework to work within, helping to make the task to clearing credit card debt that little bit easier.

Debt Settlement Plans Explained

Settling debt is all about negotiating the best possible deal on the actual amount of debt that is owed. A car issuer will agree to a fraction of the actual sum due to them, but is at least guaranteed to get some of their money back. The advantage of a credit card debt settlement for the cardholder is that the debt becomes easier to clear.

Clearing existing debts through a consolidation loan means 100% of the debt repaid, and while this is fine, the fact a larger sum must be borrowed means the loan is more expensive. Also, the cards usually represent only part of what is being cleared, so the savings are not as great as those the settlement plan offers.

Negotiations with the card companies can result in just 50% of the credit card debt being sought. Of course, securing these kinds of reductions is a tricky business, and some careful choices need to be made before negotiations begin.

Getting the Best Deal

The first choice to make is how much a credit card debt settlement scheme is desired. A pretty thick skin is needed when it comes to dealing with card companies, and to start the process, it is necessary to refuse to make any payments. This is to show an inability to pay, thus strengthening your claim for debt reduction.

This move is likely to be followed by threats of impending court action, but understand this is generally an effort to scare people into paying what is owed. Convincing the issuer there is no chance of getting anything is invaluable. Remember, when it comes to clearing existing debts, what is saved can be used elsewhere.

Of course, a key to getting the best reduction in credit card debt is to hire an experienced debt settlement negotiator, and one that is hard-nosed enough to take on the card companies. If the right person is got, then huge reductions can be expected.

Other Terms to Consider

Still, securing the very best credit card debt settlement deal comes down to more than just a good negotiator. The plan needs to start at least 6 months before that step is taken, as that is the minimum period after which a claim of inability to pay can be deemed accepted.

And even if the planning is done perfectly, the whole deal rests on the ability to offer a cash sum in settlement. So, it is essential that a large lump sum is available to clear the debt immediately after the deal is done. This form of clearing existing debts is often referred to as a Now-Or-Never deal.

Finally, remember the deal will also be added to your credit report. It does not have quite the negative influence a bankruptcy ruling has, but clearing credit card debt through a settlement plan means only a fraction of the debt is actually paid. Because officially the debt is never fully repaid, the credit score does not improve.

Securing Debt Consolidation Loans With Bad Credit Lifts The Financial Burden

The modern world places a lot of pressure on everyone to use credit when purchasing items, especially the more expensive items. But problems can quickly arise when the number of individual credit (or loan) agreements pushes us into the bad credit borrower bracket. Thankfully, getting a debt consolidation loan with bad credit is not difficult, and is a viable route out of such difficult financial positions.

There are other options, of course, such as bankruptcy, but that is not the most prudent route since the fallout can last for a decade, curtailing future credit opportunities. Consolidation makes clearing debts immediately possible without damaging any potential for loans.

Of course, there are terms and conditions to satisfy before any approval can be granted, but there is little doubt that taking out a debt consolidation loan is the best solution to the problem at hand.

Consolidation And How It Works

In many ways, consolidation is the ideal solution to severe financial problems because it can drastically reduce the degree of pressure the borrower is under. And because the purpose of this program is to help bad credit borrowers ease their burden, getting a debt consolidation loan with bad credit is pretty straightforward.

Through consolidation the balances on existing debts are bought out in one go, and because it means clearing debts immediately, the pressure is eased immediately. But in order to make the deal work, the repayments must be significantly less than the combined repayments on the original debts.

For example, because 5 individual loans will each have different interest rates and repayment terms, the overall combined cost can be very high. Replacing them with a single loan with a single interest rate means real savings. So, debt consolidation loans offer an affordable repayment method.

The Difference Consolidation Makes

Certainly, the theory behind consolidation suggests everything will be rosy, and since getting a debt consolidation loan with bad credit is simple enough, there is no reason to worry when applying for one. But in order to get the maximum out of the deal, it is important to secure the right terms.

What is more, the right terms can mean long-term benefits that improve the overall credit status of the borrower dramatically. By clearing debts immediately, the credit scores on a credit report are increased immediately too. In fact, with 5 loans cleared in one go, the score can improve by as much as 100 points.

Also, because the monthly repayments can fall by as much as 50% of the original combined repayments, there is a considerable amount of extra funds freed up. This makes your debt-to-income ratio far healthier. So, by getting a debt consolidation loan, the loan terms and options for future applications are greatly improved too.

Choosing A Debt Consolidation Program

Not surprisingly, there is a wealth of consolidation program options available to choose from, and the right program is dependent on the specific financial situation an applicant is in. Securing a debt consolidation loan with bad credit is not difficult, but remember the terms need to be right to maximize the benefits.

Of course, as with all financial products, it is necessary to meet basic criteria (aged over 18, US citizen and reliable source of income), but most lenders will also insist that the applicant have held their current full-time job for at least 6 months prior to submission.

The best source options are to be found online, where a variety of lending firms offer superior terms to those from traditional lenders, like banks. The benefits of clearing debts immediately are taken into account when the debt consolidation loan application is being accessed. However, consolidation companies also exist, and are ideal when the size of the debt is extremely high.

Getting Debt Consolidation Loans With Bad Credit: A Superior Solution To Financial Crises?

The impact of a slow cash flow can be highly destructive, leaving debtors in facing serious financial crises. It is not so much a payment or two is missed, but the late payment fees that stack up make catching up very difficult. At a certain stage, a solution needs to be found, and a debt consolidation loan, with bad credit pushed aside, can be the perfect one.

We say that poor credit scores are pushed aside, it is not because they are completely ignored, but because their significance is not enough to have an application turned down. However, securing large loan approval is far from easy when credit scores are low, making consolidation a more practical option than a large personal loan.

There is a variety of advantages that a debt consolidation loan has over other loan types. And if the right terms and conditions can be secured, it can provide the perfect solution to a financial crisis.

Consolidation: The Ideal Solution

It can seem counterproductive to take on a large loan when already struggling to clear existing ones, but it must be understood consolidation does not simply mean getting another loan. It actually means completely restructuring debts to ensure a more manageable repayment schedule is adopted.

Of course, getting a debt consolidation loan with bad credit does not have quite the same hurdles that other loans might. It is, after all, designed to aid those already in financial hot water. So, while securing large loan approval might be difficult normally, the fact consolidation is the purpose of this loan makes it more accessible.

The key advantage of a debt consolidation loan is that all existing debts are cleared, and replaced by a single debt. When 5 or more loans are involved, it makes debt management easier, reduces the risk of missed repayments, and ultimately lowers the overall cost of the debt.

Consolidation: Source Options

Applying for a debt consolidation loan with bad credit comes with no kind of guarantee, though the chances of approval are very high if conditions are satisfied. However, consolidation is provided through two different sources, and the right one depends greatly on your particular financial situation.

The first option is an independent lender, whether a traditional bank or a private lending firm. These involve an application process, with an application completed and submitted. But even after securing large loan approval, how the funds are used is left to the borrower.

The second option is to use a professional debt consolidation company, which does not actually provide a debt consolidation loan but effectively takes over your finances. The company will buy out all of your debts then take payments from your account as reimbursement. The service can be very strict, but it ensures discipline.

Consolidation: Source Decision

So, how can the right source option be decided upon? Well, as mentioned, it comes down to the extent of your financial crisis. In many cases, simply buying out the existing debt and replacing it with a single loan is the move that is needed. And with the chances of getting a debt consolidation loan with bad credit so high, is the most common.

But this is really only a practical option when the debt is not too high and the practical aspect of buying debts out is pretty straightforward. In more complicated situations, with debts of $75,000 or more, a consolidation company is best.

Securing large loan approval independently is very difficult in this case, but a company can more effectively negotiate terms for a buyout and then offer a rigid repayment program, thus ensuring a more effective result than just getting a debt consolidation loan could produce.