If you are like most people these days, you are in over your head with debt and it may be time for you to consider getting a bill consolidation loan.
A bill consolidation loan can be great because you consolidate all of your debt, or bring it together, and pay one single payment to one lender. This one payment is generally less than the multiple payments you are currently paying. For example, if you are paying on five credit cards that all require a $75 per month minimum payment, then your total per month will be $375. If you consolidate all of those bills with one lender your minimum payment might be say $200. That’s a savings of $175 per month that you can now use for whatever you like. Sounds good right; so how do you go about getting a bill consolidation loan?
Getting a bill consolidation loan is as easy as choosing a lender, as there are many companies out there that will consolidate your bills for you. One resource which I highly recommend is www.creditsources.org - if your credit history is beginning to suffer from late payments, this website will still be able to help you find a loan at a reasonable rate.
There are several different types of bill consolidation loans available and each has its own pros and cons, which follow:
Unsecured Bill Consolidation Loan: This is where you have no collateral to offer should you default on your bill consolidation loan. Lenders are happy to give this type of loan, but only if your credit score is very good. Keep in mind that because the loan is not secured by collateral, you will have to pay a higher interest rate.
Secured Bill Consolidation Loan: This type of loan means that you do have some sort of collateral to put up should you default on your bill consolidation loan. You can expect a much lower interest rate if your credit score is good, because the risk to the lender is much less than with an unsecured loan. Lenders are also more likely to take a look at you even if your credit is not perfect, but if that is the case, just realize that with bad credit comes higher interest rates.
Home Refinancing Loan: If you own a home, you can refinance your home and use the extra money to pay off your existing debt. The drawback here is that depending on your debt, this may increase your mortgage payments, but on the flip side it will make your other debt payments go away so you will more than likely save money overall. Because a mortgage interest rate is much lower that credit card interest rates, you will definitely save in the long run.
Home Equity Line of Credit: This option is available for those of you that own a home that has equity in it. You can use that equity to pay off your existing bills and save money by paying on a loan with a much lower interest rate.
Once you have decided which type of bill consolidation loan is for you, you then must choose a lender. Here is another way to save yourself some money. Find out what your credit score is, and then do some price shopping to find out which lender will give you the best interest rate. Once you decide on a lender, simply fill out the paperwork and go through the process of obtaining your bill consolidation loan. All that is left after that is to simply make your payments on time and try not to get in over your head with debt again.
Learn more about debt consolidation and debt secrets the credit card companies don't want you to know.