Tag Archives: debt
Debt consolidation loans A stable solution for wobbly finances
In the past couple of years, there has been a considerable increase in the number of people seeking debt advice and deals. With monetary liabilities reaching an exorbitant level, the British have emerged as the biggest borrowers in the World. In fact, one study indicates that through credit cards, mortgages and other loans, the UK people have racked up combined debts close to a trillion pounds. Furthermore, quite a few of them are families who are spending more than 50% of their annual income on debt repayments.
So, what compels people to take multiple loans and get into multiple debts? Well, the reasons are many the rising cost of living and changing business trends, lifestyle necessities and demands, bad decisions and mismanagement of funds, etc. We all know that with multiple payback schedules, the possibility of missing one or more repayments is high. Hence, managing several debts is not easy… One needs to be very vigilant to elude the possibility of a default.
This calls for an organised and efficient plan like debt consolidation, which is an efficient way to rearrange messed-up finances and bring them back on track. The credit bazaar offers a dexterous way to consolidate multiple arrears consolidation loans. These loans help loan seekers to pay off all their debts in one go
Hence, they are perfect for people who are looking for a plan to pay off compound debts easily and become debt-free ASAP.
Debt consolidation loans reduce their overall pressure by:
Merging multiple monthly payments into a single payment Compressing varying monthly interest rates into one interest rate Not having to deal with diverse payback plans and multiple lenders
Please note: Debt consolidation loans fuses the overall financial pressure but may not reduce the overall payback amount, as the success of availing it depends on the type of loans one consolidates. It is the most effective solution for financial products with heavy interest rates.
For example, the consolidation of multiple credit card debts will always prove to be cheaper, as credit cards have high interest rates. Also, try to choose a deal that reduces the overall loan price and payback period as compared to the existing debts.
The sub-types of consolidation loans are:
Secured consolidation loans: Are ideal for homeowners and property owners, as they require collateral against the loan amount. Presence of collateral means low APR and negotiable pay back terms and loan clauses. Hence, they are best suited for clearing larger debts.
Unsecured consolidation loans: Are ideal for all (tenants, homeowners, property owners and people living with their parents like students), as they do not require collateral against the loan amount. Absence of collateral means high APR and virtually non-negotiable payback terms and loans conditions. Hence, they are best suited for clearing smaller debts.
The aim of debt consolidation loans is to help people along the road to a better financial status. So, choose wisely and keep up with the payments on the consolidation loan to obtain a good credit rating.
Credit Card Debt: When to Seek Help
More Americans than ever need help with debt in these turbulent times. With chaos in the economic arena, unemployment creeping up, and inflation threatening, this is no time to be carrying the burden of credit card debt.
But who can help you out of the trap of high-interest card agreements when penalties and fees are mounting every day? A bank loan might let you breathe easier, but if your debt is substantial you’re just delaying the day when the other foot drops.
Perhaps the first thing to do is take a good hard look at how much debt you really have.
Calculate Your Debt Load
With a low debt load, all you need is discipline and a good budget to take control of your finances. But if your debt load is too heavy, no matter how much you sacrifice you will not be able to pay off your bills on your present income. In that case, you will have to start looking for a professional to help with debt.
So your first step needs to be finding a number called your debt-to-income ratio. This is a simple calculation:
Add up all your monthly debt: rent or mortgage, credit card minimum payments, car loans, etc. Do not include monthly expenses, such as utilities, groceries, or gas.
Add up all your monthly income: salary, bonuses or overtime, alimony, etc.
Divide your total monthly debt by your total monthly income.
Go It Alone?
If the result is less than 49% (.49), then it’s likely you can manage to start controlling your debt immediately, just by reducing your spending and increasing the amount you pay on credit cards each month.
The closer you are to that magic number, the more you’ll have to give up, though. Just for comparison, a ratio of 36% is considered affordable for most people. As that ratio increases toward 49%, the harder it will be to manage bills in the face of job loss, divorce or illness. And in times like these, it’s probably best to be as conservative as possible, striving toward a ratio between 25% and 35%.
And if your ratio is higher than 49%? Well, then you need to start considering who to turn to for help with debt.
I Need Help!
There are almost unlimited resources on the internet that you can contact for help with debt. Debt consolidators, debt settlement companies and debt relief agencies all work with credit card companies and banks to resolve their clients’ debt problems.
Each represents a niche in the credit relief industry. Some will try to reduce the total amount you owe, while others will simply try to get you better terms on existing debt. Either way, you’ll end up paying less interest and no penalties as long as you fulfill a new payment plan to reduce your debt.
It’s worth researching each type to find out which one can help most in your unique situation. Most have toll-free numbers you can call for an initial free consultation. Just remember to ask questions and demand full information about the services offered and the costs involved. Do not allow yourself to be pressured into using a servicea hard sell is a red flag in this industry. It is very important to also verify the organization’s standing with the Better Business Bureau and the Attorney General of your state and the state where the company is registered.