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What You Should Know About Military Consolidation Loans

Jan 26, 2008
Military personnel are like most other workers in that they, too, sometimes struggle to keep up with debt. There are agencies in place strictly to help members of the military get out of debt.

While they have among the most honorable jobs in the world, military personnel get short on cash just like everyone else. While they may not have to go hungry, they will ikely find it hard to get rich. Fortunately when members of the military are in desperate need of cash, there are programs to help them get a loan.

The ease in getting credit has led to the forming of military consolidation loans. Like other debt consolidation loans, these loans combine all of the debts a member of military personnel has accumulated and combines them into one loan. In turn, the member need only pay one single monthly payment to pay off all of their debts.

The monthly amortizations on military consolidation loans are spread out over a longer time period in lower amounts than the total monthly payments on their loans (when they were still not consolidated). The payment is made only to one creditor.

Active duty military personnel often find that they need to take on loans. A change in assignment can mean that their spouses must give up their current job in order to move, and therefore the necessity to obtain a loan is not uncommon. There are agencies set up solely to help military personnel consolidate their loans. These agencies are the Military Debt Management Agency, American Military Debt Management Services, and AAFES.

These agencies make special arrangements so that the borrower only needs to make one monthly payment. They renegotiate the interest rates and terms of existing loans. In addition, they make sure that the consolidated loan is tailored around the ability to repay and expected income of the borrower.

Military personnel also have the option of taking out a large loan to pay off all existing debts completely using the loan. This, however, is only advantageous if the interest rate on the new loan is much lower than the interest on the existing loans.

If a member of the military services opts for a military consolidation loan, he or she will make all payments to a single loan agency. The monthly bills must always be paid, however, as the interest rate increases with each missed payment.

Like other loan consolidation programs, military consolidation loans come in two basic types. There is the home equity loan, where the home of the borrower is used as collateral. There is also the zero interest credit card, which allows the member to pay his or her debts with credit for a zero interest rate. The previous debts are consolidated and paid in one payment monthly. The minimum payments on these loans must be paid in order to keep the interest rate from rising sharply.

Whichever option the member ends up choosing, it is crucial to make each payment in time. The borrower is also responsible for making sure that interest paid on the consolidation loan is lower than the total interest on all of the debts that are being consolidated.

Cash flow should also be taken into account, especially when it comes to home equity. While a delinquency in the payment jacks up the interest rates, prolonged delinquency can actually lead to the repossession of the house.
About the Author
Searching for information on debt consolidation loans , credit card consolidation or any type of loan consolidation? Consolidation Loans Advice is a massive resource for tips on all aspects of loan consolidation. Get the facts.
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