Bad Credit Consolidation Loan

Bad Credit Consolidation Loan

If you have collateral, then YES!

Bad Credit Consolidation Loan Q&A

Q: What do I need to get a bad credit consolidation loan?

A: Unsecured debt, collateral and a willingness to become debt free.

Q: What's collateral?

A: An asset that the lender can seize if you stop making your loan payments. Usually it has to be something that's paid for in full, like a car, a boat or a house.

Q: How can a bad credit consolidation loan help me?

A: Some say a bad credit consolidation loan is just replacing one set of debts with another. Basically, that's true. But the interest rates you're paying on your unsecured debts now is astronomically high, which means it could take 18 years or more to pay off. Here's an example: A $10,000 debt at 18.5% interest typically takes 32 years and $24,500 to pay off if you don't pay more than the required monthly minimum. But when you get a bad credit consolidation loan, you lower your interest rate dramatically, allowing more money to go towards the principle. The same amount of debt could be paid off in about five years.

Q: How does the process work?

A: Once you find a reputable bad credit consolidation loan lender (typically a debt or credit consolidation company) they will discuss the terms of the loan with you before giving you the loan. Once you get the loan, you pay off all of your unsecured debts, then you make one monthly payment to the credit consolidation loan lender instead of several monthly payments to your creditors. In about five years, the loan will be paid in full.

Q: Can I still use any credit cards I pay off?

A: You can, but it's not advisable. If you're having trouble making ends meet as it is, racking up more debt is only going to make things worse. You'll have a loan payment and more credit card debt. You may not have enough collateral to get another bad credit debt consolidation loan. At some point, you won't be able to afford any of it. We suggest that you get some credit counseling when you get your loan so you can learn how to live within your means without using credit.

Q: What if I don't have any collateral?

A: You can still get help in the form of a bad credit consolidation program. This involves negotiation to get your unsecured debt balances and interest rates lowered. Then the new, lower balances are combined and you make one monthly payment to the debt consolidation company, which they distribute among your creditors. Because of the reductions, you can become debt free in about five years. No loan is involved so no collateral is needed.

We hope you've found this information helpful. If you want to know about other debt management programs, continue to navigate through the site.

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