What Are Bill Consolidation Loans?
If you are hoping to payoff your debts, obtaining a bill consolidation loan may be the solution. Each year, millions of consumers enjoy a debt free life. Although becoming debt free may seem like a dream, there are many options available to reduce or payoff credit balances. One option includes a bill consolidation loan.
Bill consolidation loans, also referred to as debt consolidation loans, are essentially personal loans that are used to payoff high interest credit cards, student loans, auto loans, etc. These loans will combine all your outstanding balances into one loan. No longer will you have to make numerous little payments a month. In its place, you make a single payment to pay back the bill consolidation loan.
Types of Bill Consolidation Loans
There are various types of bill consolidation loans. Moreover, each loan is geared toward a specific situation. Those who own a home may take advantage of home equity options. These include home equity loans or home equity lines of credit. In both cases, homeowners may borrow money against their home’s equity to payoff bills. Home equity loans have low interest rates, thus they are easier to repay.
If you have a stellar credit rating, getting approved for an unsecured personal debt consolidation loan is another option. These types of loans are tricky. Because banks and other lending sources are taking a gamble with unsecured loans, bad credit applicants are not approved for these loans.
On the other hand, if a bad credit applicant is willing to use a piece of property as collateral, perhaps a vehicle title, banks may consider approving a loan request. Individuals with bad credit should also apply with lenders that specialize in high risk loans.
Understanding Your Personal Credit Rating
Prior to applying for a personal bill consolidation loan, check your credit score. Lending institutions put a lot of emphasis on credit scores during the loan approval process. Individuals with several negative remarks and a low credit score are less likely to get approved. If your credit report has a few blemishes, fix what you can before applying. Higher credit scores increase your chances of getting approved for a low rate loan.
Way to Eliminate Debts
Although there is no way to eliminate debts overnight, you can manage debt in a way that offers quicker repayment. There are many programs and loans available to help consumers become debt free. Because each person has a different situation, they much choose a debt reduction strategy that is most fitting for their circumstances. Here are a few tips on ways to quickly reduce debts using a bill consolidation loan.
Debt Reduction Options Available to Homeowners
Fortunately, owning a home makes it possible to quickly reduce credit card debts and other loans. Over time, homeowners will build equity in their homes. To gain access to the equity, homeowners must choose to sell their homes or take advantage of mortgage loans that allow them to tap into the equity.
These options consist of a mortgage refinancing or a home equity loan. There are advantages and disadvantages to both options. Nonetheless, if you are hoping to eliminate debts and consolidate bills, either option is effective. Before choosing a method of bill consolidation, closely examine your situation. A mortgage expert may be useful in helping you decide the most effective approach.
Take Advantage of Good Credit Rating
If you do not own a home, or do not want to use a home equity option, it may be possible to get a personal debt consolidation loan. Getting approved for these types of loans are difficult. On the other hand, if you have good credit and gross a sizeable income, some banks or credit unions may be willing to grant a bill consolidation loan. Unsecured loans have higher interest rates. To get approved for a lower rate, think about using some sort of collateral, perhaps a vehicle title.
Debt Consolidation Service
Non-homeowners with bad credit also have options for consolidating their debts. Although banks are less likely to offer bill consolidation loans, there are several debt management services that offer consolidations. These consolidations involve no credit checks or collateral.
Debt management services simply consolidate all debts into one payment. Furthermore, agencies will negotiate lower rates with current creditors. Thus, monthly payments may be reduced up to 60%. Working with a debt consolidation service is a great way to become debt free in five to ten years.
How to Deal With Debt Stress
In all the information and discussion about credit card debt there is one thing that gets largely ignored. Stress. Credit card debt is extremely stressful and can have a very negative effect on your life if you let it.
It’s very difficult to not feel its effect but you can learn to deal with it more effectively. Stress is as bad as an addiction, always hanging around, bringing you down, making it hard to live your life the way you want to. If you can recognize it you can deal with it.
There are an awful lot of symptoms that can be caused by stress. Some of the most common ones are: headaches, not being able to sleep, feeling depressed and irritable, and being forgetful and unable to concentrate on what you’re doing. If you’re not sure whether your symptoms are related to stress or something else go and see a doctor.
Almost everyone who has debts is stressed about them. Debt is blamed for millions of days off work every year and is one of the leading causes of suicide. Students and graduates are especially vulnerable as debt is growing amongst them faster than in any other group.
The average adult owes many thousands in debt. Since that’s the “average” it means that many people must owe much more. Never forget that you’re not alone and there’s always someone worse off than you.
Stress caused by debts is often considered to be embarrassing or shameful. People with lots of debts don’t want to talk about it, even with their family for fear of upsetting people or looking like a failure. It is very important, though, that you do talk about your problems. Keeping it all inside yourself will make you much more stressed. It is especially important that you talk to your partner. They are the number one person who can support you.
The best thing to do is to find two people: one who can advise you and one who can be a personal counselor. That means a professional who knows what they’re doing in financial matters, as well as a psychologist or psychiatrist. Don’t let the stigma put you off, this is about your health.
Get on a solid plan to get out of debt and manage your finances. Figure out how you got that debt to begin with. Understand the problem and work out a budget. Cut unnecessary expenses and try to free up as much money as you can to pay back debts.