Debt consolidation is the route that a lot of people take when they feel that things are getting on top of them financially. If done correctly, it can be an excellent way to reduce the total interest you pay if debt is made up of credit cards. Many people will seek a loan of this type to help get them straight, financially. However, there are things that you need to avoid when getting a loan. Otherwise, things could become rather expensive for you!
Keeping up with the Payments
You often find that debt consolidation loans can take some time to process, maybe even a couple of weeks. While you are in the process of applying for your loan, you will still need to make sure that you keep paying your bills as normal. Otherwise, you may find that they become overdue, and this will incur additional charges that will soon mount up. If the majority of your debt does come from credit cards, then you will be advised to stop using them entirely before your loan is approved, and you pay your debts. Even when you have paid your debts, it would be advisable to cancel all but one of your cards, and use that only in case of an emergency. If you don't then you may find yourself back in the same situation in the not too distant future.
Do Not Apply for Multiple Loans
When some people are in the market for a consolidation loan, they will enquire with a lot of different companies, shopping around for the best deal possible. The problem is that every time you apply for a personal loan, this will make a request for your credit history, and each request will lower your credit rating slightly. So when you already have a bad credit history, and you start applying to every company that you see, they will probably refuse you and do a little bit more damage to your credit rating. Rather than apply to every company online, instead find out what your credit score is. You can then approach potential lenders and ask them the credit rating requirements for a loan. Many reputable companies will openly advertise this sort of information, or you can send an email or even make a phone call to find out what you need to know. When you have all of the lenders credit requirements you can then choose the lender most suitable to your situation.
Untrustworthy Online Companies
There are a lot of money lenders that you can find online, and some of these are scam artists while others are legitimate companies. When you apply to these types of companies, they will offer loans even with a bad credit history, and will ask for upfront fees, or a few months payment in advance. These are the types of companies to avoid, and you should only approach credible companies that you trust. That is not to say that every online company offering loans is untrustworthy, as there are many reputable companies. When you have a company that you are potentially going to approach, make sure that you also do some research into the company.
It is important for the company to be registered and also licensed, which you can easily find out with the aid of the internet. It is also worth your effort to look at some reviews of the company online, and try to get some independent opinions of personal dealings with the company. As long as you do not rush, and you do some research, you will find a company that offers you a fair deal, which will solve some of your financial problems.
Abbi Gabasa is the Managing Editor of MsCareerGirl.com and owner of UpraisedLiving.com. Having the background of a Marketing and Public Relations Manager with years of professional experience in various industries has given her an insightful perspective on careers, lifestyles, relationships, and attitudes which she humorously applies in helping people through her writing. Abbi is a training life coach, and an advocate of children's charities, women empowerment, optimistic thinking, and slow Sundays. A self-confessed Jane of all trades, she hopes to help girls all over the world find their calling and pursue their passions.