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How to Find the Right Low-Interest Debt Consolidation Loan

Apr 16, 2008
Excessive credit card debt can lead to difficulty paying monthly bills on time. A debt consolidation loan can help lower your monthly credit card payments by combining the high interest credit card debt into a single loan.

Beware of counselors or "debt management services" that may make promises they cannot keep just to get an application. Some of these services may charge higher interest rates than you are already paying in addition to charging a fee for services.

A debt management service can negotiate with each creditor on an individual basis for lower interest rates and to stop credit card fees from accruing. When a settlement has been reached, the interest rate will be a fixed rate. Provided the creditor is paid on time this rate will not increase. In the event of default resulting from late payment the creditor retains the right to resume collection proceedings.

The application process for debt consolidation loan services requires all monthly bills and income statements to make an accurate determination (And that means all of them). The amount of time for processing will depend on what method of application you choose.

Some applications may be completed on a company website, while other companies handle the application process over the phone. It is vitally important to ensure the company is reputable before revealing any of your personal information. Reviews of these programs and companies are available online and by contacting the Better Business Bureau or Chamber of Commerce in the city where the company operates. These will help in the decision in selecting the right company to handle the debts.

Companies may offer a loan that they tout as having "no restrictions", but don't be taken in by such hype and always read the fine print before making any final decision. It is possible in some cases to borrow more than you owe - often a lot more than you owe - and have that additional amount added to the total of your loan.

A word of caution when considering additional funds: The idea is to eliminate the debt and an addition to the loan could exacerbate an already bad situation. The loan consolidation counselor may attempt to prompt you for a larger loan than you really need. If you really do not need the extra money then turn it down. You will thank me for that advice later.

With reputable companies, you will have several plans available to choose from. Working with a loan consolidation counselor and discussing your situation openly and honestly will aid in choosing the right company to handle your debt. Until you agree to their terms and commit to them, remember that they are salespeople trying to win your business.
About the Author
Thinking about loan consolidation? Go and visit www.allaboutloanconsolidation.com and learn about unsecured loan consolidation and other related topics.
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