When you start to think about how to consolidate bills your finances have probably become unmanageable and overwhelming. Luckily, doing this will fix that problem for you and as long as you go about doing this cautiously you’ll be on the way to a debt free life.
This is actually a much simpler process than many people would have you believe. This is simply the act of gathering all your debts, totaling them up, and then finding a new loan which you will use to pay them all off with. You then start making one monthly payment on the new loan. Of course, obtaining a new loan may be a problem, but essentially it’s a simple process.
The main advantage in doing this is that you will only have one monthly payment to worry about after doing this. This will make managing your finances much simpler. The other advantage is that, hopefully, you will find a lower interest rate to save you money. Also, by doing this, you will avoid further late fees on your bills, and avoid any further damage to your credit score. As long as you make your payment on time every month this should have nothing but a positive effect on your credit.
What kind of loan you’ll want to look for is the first real decision you’ll need to make once you decide to do this. The first and most basic decision is whether you’ll want to find something secured with collateral, or unsecured.
Because secured loans offer collateral they lower the risk the lender is taking by offering you a loan, which consequently raises the risk you are taking because if you fail to make your monthly payments your property will be repossessed by the lender and sold to make up the money you owe. You are rewarded for taking this risk with a much lower interest rate and more flexibility from your lender. If you have bad credit this will greatly improve your situation, and if you need to make smaller monthly payments and stretch the length of repayment out lenders will be more flexible with this.
Unsecured loans are given to applicants based on their credit history, so if you have damaged your credit with debt problems you will have a harder time with this. The interest rate you will be offered is based on the level of risk the lender feels they are taking, so the worse off your credit is the higher your rates will be. You will definitely want to search around and get rate quotes from several lenders to make sure you get the best deal, I generally recommend looking at five companies.
Once you have the loan, you are all set! Be sure that you have a budget and will be able to manage the monthly payments before signing anything to avoid any future problems, and you’re on your way to a debt free life. When you have a plan and consolidate bills you are able to save yourself some money and make your finances more manageable.