The Debt Consolidation Loan

Almost every lender in the UK would willingly offer you the necessary finance to eliminate your debts. This is even when there is no collateral to back the loan amount. Debtors are able to get finance easily to settle their debts. 

However, there is a limit to the times that one can push his finances to the edges. Accumulating a huge mound of debts every time to be cleared through a debt consolidation loan will be unwise. 

Like in any financial matter, the structure of the debt consolidation loan should be decided with prudence. By the structure of the loan is meant the terms on which the loan is taken. This includes the rate of interest, amount of monthly instalment, prepayment facility, etc. 

Do not hesitate in questioning the terms that you find unjustifiable. Take independent advice if necessary from independent financial advisors. This would be helpful because they have a specialised knowledge of the field. The independent financial advisors provide guidance on important matters related to the loan. 

These steps, though being time consuming will ensure that the debt consolidation loan eliminates a burden and does not turn into one. 

A strict adherence of the steps ensures but not guarantees against the bad effects of the debt consolidation loan. However, there is the assurance that you took sufficient steps though the debt consolidation loan turned bad because of certain unavoidable factors. 

When the debt consolidation loan has been secured on ones home or certain moveable or immoveable assets, the stake is directly on the asset pledged. 

Incapability to repay loan instalments will result into repossession of the asset. Even when the debt consolidation loan is unsecured, lender has the right to recover the amount unpaid through court proceedings. 

Another argument for a judicious use of debt consolidation loans is that the equity in home so consumed could have been used for other important purposes. 

Equity in the home makes the borrower eligible for better deals in whatever loan that he approaches for. 

Having consumed the whole equity will force the borrower to accept deals at par with the non-homeowners or at comparatively higher rates of interest. 

Doesn’t that make up a good case against the misuse of debt consolidation loans? 

The first step in preventing the misuse of debt consolidation loans is deciding when to allow the interference of a debt management agency. 

This step will involve gauging ones capability in relation to the debt amount. An accurate measure of the capability must be reached to avoid future repercussions. 

Engaging the services of a debt management agency when the debts can be easily eliminated through ones own resources will amount to a misuse of debt consolidation opportunities. 

On the other hand, not involving a debt management agency knowing that the debts are beyond reach will only give debts a greener pasture to grow without bounds. 

Thus, a proper appraisal of ones capability must precede any decision to draw debt consolidation loans. 

Having accepted the intervention of the debt management agency, the next important task will be to decide the amount to be drawn as debt consolidation loan. 

The best measure of the appropriate amount of debt consolidation loan can be had by consolidating or clustering the various debts. Debts include debts on account of credit cards, store bills, bank overdrafts, etc. 

While listing the debts for settlement, debtors must ensure that no debt is left unattended, whether big or small. The amount drawn under debt consolidation may exceed the amount of debts. Cheaper finance available for debt settlement can be saved for use in other purposes. 

What distinguishes a debt consolidation loan from the other loans is the guidance provided by the lender in eliminating debts. 

This facility is purely optional and borrowers can themselves conduct the repayment. However, the facility that is being talked of is for individuals for whom it is difficult to take time out of their busy schedules. Moreover, they would willingly engage the services of the debt management agency to avoid confrontation with the creditors. 

Lastly, and the most important of all, debt management agencies have better faculties to deal with these situations. They are good negotiators and can bargain a deal that can save several pounds for the borrowers.

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Do you know what type of loan you want?

Mortgage loans come in a variety of financing forms to best suit your needs. You can choose a fixed rate loan, which is a traditional choice. Or you can choose an adjustable rate loan that will lock rates in three years or later. Other options include an interest only loans, balloon loans, or jumbo loans. 

All these different types of mortgage loans have their advantages and disadvantages. To pick the best one for your financial situation, read up on mortgage loans. Most online mortgage lenders offer helpful articles on their websites to help you understand terms and rates. You can also email them if you have a particular question. 

Online mortgage lenders handle all the same loans that a traditional bank would handle. In fact, mortgage brokers can find financing packages that a traditional bank might not be able to offer. 

Better Rates With Streamlined Process 

Trading in an office visits for a streamlined online loan process allows you to save money on your mortgage loan. Some mortgage lenders eliminate loan fees, while others reduce their interest rates. Add up the cost of the interest and fees to find the lowest priced financing package. 

Scheduling A Home Loan 

One surprise for new home buyers is the amount of time required to apply for a mortgage loan. Filling out the application is simple enough, but a traditional bank may require you to go in multiple times to review paperwork and sign forms. Online mortgage lenders allow you to complete paperwork online at your convenience. When you do need to sign the forms, you do it in the presence of a notary that you schedule. 

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What Is A Credit History?

Before you pursue a loan of any type, it’s important to know more about your credit history. It is a record of all your past financial commitments and contains information about your repayment reliability and the total amount of debt you’re carrying. Banks and other lenders look at this record to determine your credit worthiness, usually by assigning you a credit score. The lower your credit score the less likely a lender is to underwrite your loan. 

How Did I Get A Bad Credit History? 

Your credit history is an ongoing compilation of information about you, so anytime you make a late payment or miss a payment it is captured in the file. Likewise, if you have ever defaulted on a debt or otherwise failed to fulfil a financial contract it will show up in your credit history. 

Credit reference agencies collect other information about you, such as changes in employment or address. If your record shows that you make such changes frequently this will also lower your credit score. 

Will I Ever Qualify For A Loan? 

Yes, most people with bad credit will be able to qualify for some type of loan but usually with some restrictions and limitations. There are numerous lenders who focus specifically on loans for people with bad credit so don’t give up. 

Just keep in mind that you will probably be charged a higher interest and offered a lower loan amount. The positive part of this is that once you’ve secured the loan you can start repairing your bad credit history by making regular, on-time payments. It happens slowly, but over time your credit history will show improvement. 

What Type Of Loan Can I Get? 

There are two types of loans available to you if you have poor credit – unsecured and secured. Unsecured loans are more difficult to get because you don’t put up collateral as security for the loan. This is risky for the lender so expect them to require more stringent loan terms in this situation. 

Secured loans, on the other hand, require you to provide some form of asset as collateral. Most of the time this means you will secure the loan with your house. The amount of money you can borrow and the interest rate you will pay are influenced by your credit history, your total amount of debt, and your home’s value. Different lenders weight these items different ways, so be sure to check with several to find one with a program suited for you. 

I Have Bad Credit – Where Can I Find A Loan? 

Before you submit any loan applications, gather some information from several potential lenders. Find out about their interest rates, any special loan terms they may require, and any other specifics about their loan process. One word of warning – researching lenders is different than actually submitting loan applications. 

You can do all the research you want, but be careful not to submit a large number of loan applications over a short time period. This kind of activity can actually damage your credit history further. Another option is to contact an independent loan broker to help you find appropriate lenders and loan programs. 

Other Resources For Finding Bad Credit Loans 

One of the most popular resources for researching bad credit loans is the Internet. Almost all lenders have web sites that provide guidelines and information about their loan programs for people with bad credit, and some even offer online application processes. As noted above, though, don’t fill out large numbers of applications or you may damage your credit rating further.

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