Think Consolidation When Drowning In Debt

s2Plenty of attractive goods and services in the market

+ Smart bankers ready to finance your dreams and aspirations

= Rapidly multiplying debts and EMI obligations

And before you realize, many small bills add up to a hefty amount that threaten to take away most of your salary… every month.

If your debt problems are yet to achieve serious proportions…

If you haven’t still crossed that all-important point of no return…

… there is a remedy to solve all your debt worries.

Known as ‘Consolidation of debt’ in financial jargon, it simply means replacing many small debts with one or two large ones. This may, on the face of it, not sound as a very big deal. However, the effect can indeed be quite magical. As I repeatedly exhort, keep things simple. Simple investments, simple insurance, simple debts, etc. are sufficient enough to give you an excellent financial life. You don’t need any complicated products to make you rich.

Consolidating your debt simplifies your debt profile as it has the potential to lessen your burden in many diverse ways.

Lesser are the loans to service

As you would have experienced, keeping track of several loans and trying to pay various bills by the due date is a tedious affair. Even when you have to ability to service all your debts, it is easy to miss payments when the number is large. And within no time it can balloon into a gigantic problem. When you consolidate all your debts into one or two, you get a much better perspective of your financial picture and your debt problems appear much less alarming.

Lesser is the interest outflow

Different debts carry different rates. Also, there is the additional penal interest whenever you default. When you take a single loan to pay off multiple debts, the interest payout on this new loan is almost surely lower than the sum total of interests on many individuals loans. This is a double bonanza. One, your monthly payout reduces. Two, lesser payout means more money in hand, which can be helpful in accelerating your debt reduction. So within a short period of time you will see a rapid decline in your liabilities.

Lesser is the time pressure

One of the key aspects of too many debts is too many missed payments. Naturally, therefore, you are under immense pressure of these numerous unpaid bills. And, despite your good intentions, you may have no means to pay them all off at one go. What if you get an opportunity to repay the overdue amount in instalments? Combining debts comes to your rescue by staggering these outstanding payments over a longer time frame. With the pressure off, you start rebuilding your life with a lot more peace of mind.

Lesser is the harassment

Many debts means many forgotten bills. And many unpaid debts means many unhappy lenders. Many unhappy lenders means many foreclosure notices and many threatening phone calls. One or two creditors, post consolidation, means lesser chances of not remembering your due dates. No delays means no more harassment.

The Solution to Your Debt Problems

39What does Finance for Consolidating Debts mean?

Finance for consolidating debts is an option you can consider if you find yourself struggling to make your monthly mortgage payments and also trying to pay off of your debts at the same time. It involves the process of refinancing your current mortgage loan and combining any or all of the following debts into one mortgage. All of these debts have their own repayment terms, interest rates, fees and charges, and differing days of the month to repay the debts:

>> Personal loan

>> Credit card

>> Store card

>> Car loan

>> Leasing arrangements, and

>> Other loans

Are You in this Situation?

Like many consumers you have made your life miserable and stressful by getting yourself into a situation where you have:

>> A number of different loans, and

>> The loans being held with a number of different lenders/credit providers

Is Finance for Consolidating Debts the Right Solution for Me?

If you are currently finding it hard to keep up with your debts and you are struggling to make ends meet, for whatever reason, it is important to act quickly. Look no further because, you can get your finances back on track. Here are some practical reasons why finance for consolidating debts is the right solution for you:

>> You will not have to experience the stress and pain of overdrawn or over the limit credit card balances

>> You will not have to pay the higher credit card interest rates anymore

>> You will effectively manage your personal and household budget as you will not have to use numerous credit cards, etc.

>> You will not have to experience the possibility of missing some repayments on your debts and then having to pay a higher interest rate on the debts outstanding

>> You will improve your cash flow and streamline your payments without compromising your long-term financial outlook

>> You will have a lower interest rate

>> You will make only one repayment

>> You will have lower monthly repayments

>> You will get yourself back in control of your debts much sooner than anticipated

Take Action Straight Away

The first step is to talk to professionally qualified and expert finance brokers and let them know you are experiencing financial hardship. Finance brokers are committed to reducing your financial stress and getting you back on track again. They will assess your financial situation in detail under the responsible lending criteria and they will:

>> Conduct a serviceability test based on your overall financial situation, and devise an individual budget plan for you

>> Analyse your income and expenses and will work with you to present all the available options

>> Help to improve your cash flow and streamline your payments to avoid damaging your credit history

>> Help to lower your overall cost of repayments, to avoid any late repayments and to avoid the possibility of paying a dishonor fee

>> Explain everything to you in simple, easy to understand terms

>> Consolidate your debts, if you are paying a higher interest rate on your liabilities and depending on your financial situation

Obtaining finance for consolidating debts is very easy when you have a finance broker to help you. So, don’t worry about your debt problems anymore. Obtain the best finance package to consolidate your debts today.

Debt Coadunation Through Large Personal Loans Despite Bad Credit

24Popular media has certainly added to the scale of the world’s current credit epidemic. Headlines say that nations are mired in debts, and editorials criticize the “irresponsible borrowers”, “reckless lenders” and even today’s “consumerist culture” is sometimes held responsible for it. However, this view is not shared by financial institutions for which it is important to distinguish between “debts” and “bad debts”, because options as simple as debt coadunation loans are in place to help people along and make their lives easier.

Bankers believe that the use of most loan types is not problematic and even a negative credit reflection isn’t a problem in many cases. According to research, 95% of the adult population of the United States (the same amount as it was ten years ago), believes that their debts are not a “heavy burden”. Those whose debts are problematic are the minority.

According to a recent study, only 4% of adults reported having overdue consumer debts on public accounts that are late by more than three months. Bankers argue that the peace of mind brought by having access to cash when you need it, even with bad credit, cannot be argued with. Social commentators, however, are more skeptical.

According to some observations, this is a social matter that affects some groups more than others. Representatives of financially struggling groups are also more likely to have debts with “sureties” and family accounts. This option often leads to the most severe legal consequences.

As with other forms of inequality, bad debts can affect the most vulnerable members of society. Health systems analysts also argue that having debts has implications for the health and social well-being of a person. Analyzing the existing literature on poverty as a cause of poor physical and mental health problems in people will reveal further historic proof of this.

Analysts say a similar relationship between your financial records and your health exists. Moreover, they claim that debts can be a risk factor for social isolation, create a sense of danger and shame, and even suicidal intentions. Consequently, the issue can be looked at from financial, medical and social perspectives.

The reason for a debt coadunation loan to be so useful is quite plain to see. The mere peace of mind of having all your debts in a manageable format is good for your mental and physical health, in a very real way. Having this option, even with a bad credit profile, can help many get themselves back on their feet, if they are careful with it.

Paying Off And Consolidating Credit Card Debt

cd3Credit Cards have become a necessity of life these days, but one should use it carefully because spending much more than your capability of paying it off. More expenditure would increase the chances of having to take out a Consolidated Debt Loan or accruing bad debt in general. A Consolidated Debt loan on your Credit Card can be a headache. It stays as a burden over your head until you pay it off in full.

There are many ways of paying off your bad debts, including credit cards. Many of them are mentioned here, which will prove to be helpful to those with bad debt and even to those who are expecting to get a new credit card.

– Start by setting up financial goals, which could help you in paying off your bad debt. Accumulating debt is easy, but paying off those debts often takes a lot of time. All those who are under the burden of credit card debt should first of all prepare a list of the debts by gathering all of their card statements, and arrange it in the order of the priority i.e. the one which is very expensive and which has high interest rate should be kept on top, and other thereafter.

– Once you have prepared your list and set up the goals, you should keep on reviewing your progress, so that it keeps you motivated. It will help you in striving hard to pay off your debts in short period of time.

– Take your credit card out of your wallet and keep it in a place where you don’t confront it again and again. This will aid in your resistance from using the card and accumulating more debt.

– What you could also do in paying off credit cards, is to keep a tab over your expenses. Try to go for only those which are really necessary for you, and don’t indulge yourself in unnecessary expenditure.

– Another good way to clear off your bad debts easily is to use your savings, it could prove to be a boon in such circumstances. Whereas, it is not recommended if you do not have much savings or some strategy through which you can again gather much savings in shorter time span. Go for your savings in such case only when the condition have started getting worse, because spending your savings for paying your debts could lead to financial insecurity for you in the future as savings can be used as emergency funds for the future.

– One can go for Debt Re-financing, also known as Debt Consolidating Loans i.e. another loan which is specifically available for paying the consolidated debts. You can opt for a Debt Refinance, which is available at low rates of interest.

– Balance Transfer of your current Credit Card to a new credit card with low rates could help you in getting rid of your loans with ease; however it becomes necessary to get all the information related to your new credit card. Be careful of any kind of hidden fees, cause if there is any, it would simply be a waste of efforts and money. Even though, Balance Transfer is really helpful, but could impact your credit.

– Paying your credit card debt by choosing the lowest available EMI (Equated Monthly Installments) won’t prove to be fruitful. This is because it would lead you to pay high amount of interest over time.

– Another good option is taking out equity of your house or other property to pay off your debts. Although one should check for the value of his house or property before going for it because property prices may be rising up and going down. Sometimes choosing equity for property could lead one to increase his debts; probably because the property they have mortgaged may value lower than their debt. This option is used because mortgage rates are lower than credit card rates. Be careful doing this though, and to be sure that you don’t accrue any more debt with this sort of debt reduction strategy.

Glossary Of Consumer Finance Terms

w55A guide to many of the terms used in the consumer finance market.

A

Acceptance Rate – The percentage of customers that are successful when applying for a loan or credit card. 66% or more applicants must be offered the advertised rate know as the Typical APR (See ‘Typical APR’ below).

Annual Percentage Rate (APR) – The rate of interest payable annually on the loan or credit card balance. This allows potential customers to compare lenders. Under the Consumer Credit Act Lenders are legally required to disclose their APR.

Arrears – Missed payments on a loan, credit card, mortgage or most kinds of debt are termed Arrears. The borrower has a legally binding obligation to settle any arrears as soon as possible.

Arrangement Fee – Generally for the administration costs of setting up a mortgage.

B

Base Rate – The interest rate set by the Bank of England. This is the rate charged to banks for lending from the Bank of England. The base rate and how it may change in the future has a direct influence on the interest rate a bank may charge the consumer on a loan or mortgage.

Business Loans – A loan specifically for a business and generally based on the businesses past and likely future performance.

C

Car Loan – A loan specifically for the purchase of a car.

Consumer Credit Association (CCA) – Represents most businesses in the consumer credit industry. Government, local authorities, financial bodies, finance focused media and consumer groups are all members. Members sign a constitution and must follow a code of practice and business conduct.

County Court Judgement (CCJ) – A CCJ can be issued by a County Court to an individual that has failed to settle outstanding debts. A CCJ will adversely affect the credit record of an individual and can possibly result in them being refused credit. A CCJ will stay on a credit record for 6 years. It is possible to avoid this major negative stain on your credit record by settling the CCJ in full within one month of receiving it, in this case no details of the CCJ will be stored on your credit record.

Credit Crunch – A situation where Lenders cut back on their lending simultaneously usually down to a shared fear that borrowers will not be able to repay their debts.

Credit File – Information stored by credit reference agencies, such as Experian, Equifax and CallCredit, on an individuals credit and borrowing arrangements. The Credit File is checked when Lenders consider a credit application.

Credit Reference Agencies – Companies that keep records of individuals credit and borrowing arrangements, amounts owed, with who and payments made, including any defaults, CCJ’s, arrears etc.

Credit Search – The general search undertaken by the Lender with the credit reference agencies.

D

Debt C0nsolidation – The transfer of multiple debts to a single debt via a loan or credit card.

Default – When a regular debt repayment is missed. A default will be recorded on an individuals credit record and will adversely affect the chance of success of any future credit applications.

Data Protection Act – An act of Parliament in 1998 and the main legislation that governs the use of personal data in the UK. Lenders are not allowed to share an individuals personal data directly with other institutions or companies.

E

Early Redemption Charge – A fee charged by Lenders if a borrower pays back their debt before the debts agreed term is reached.

Equity – The value a property has beyond any loan, mortgage or other debt held upon it. The amount of money an individual will receive if they sold their property and repaid the debt on the property in full.

F

Financial Conduct Authority (FCA) – The government appointed institution responsible for regulating the finance market.

First Charge – The mortgage on a property. A Lender who has first charge on a property will take priority for repayment of their mortgage or loan from the funds available after the sale of a property.

Fixed Rate – An interest rate that will not change.

H

Homeowner Loan – Also commonly known as a secured loan. A Homeowner Loan is only available to individuals that own their own home. The loan will be secured against the value of the property usually on the form of a second charge on the property.

I

Instalment Loans – Multiple loan repayments spread over a period. Depending on the Lender their may be flexibility in the repayment amounts and schedule.

J

Joint Application – A loan or other credit application made by a couple rather than a single person e.g. husband and wife.

L

Lender – The company providing the loan or mortgage.

Loan Purpose – The purpose for which the loan was acquired.

Loan Term – The period of time over which the loan will be repaid.

Loan To Value (LTV) – Generally associated with a mortgage and taking the form of a percentage. This is the loan amount in relation to the full value of the property. e.g. an individual may be offered a mortgage of 90% LTV on a property worth £100,000. In this case the offer would be £90,000.

M

Monthly Repayments – The monthly payments made to settle a loan including any interest.

Mortgage – A loan taken specifically to finance the purchase of a property in most cases a home. The property is offered as security to the Lender.

O

Online Loans – Although most loans are available online. The Internet has allowed for the development of technology that allows for the faster processing of a loan application than traditional methods. In some cases a loan application, agreement and the funds appearing in your account can take as little as 15 minutes or less.

P

Payday Loan – A short term cash advance of up to 31 days which is repayable on your next payday. Payday loans come with a high APR because of the shorter term of the loan.

Payment Protection Insurance (PPI) – Insurance to cover debt repayments should the borrower be unable to maintain their repayments for any number of reasons including redundancy, illness or an accident.

Personal Loans – A general loan for any purpose and in varying amounts that can be provided to an individual based up on their credit history.

Price For Risk – Lenders now have a range of interest rates that are chosen based on an individuals credit score. An individual with a poor credit score is deemed High Risk and will likely be offered a higher interest rate as the Lender factors in the possibility of them defaulting on their repayments. Conversely an individual with a high credit score and a good credit history is considered Low Risk and will be offered a lower rate of interest.

Q

Qualifying Criteria – The eligibility requirements required by the Lender. The most basic criteria required to qualify for a loan in the UK are; permanent UK residency, age 18 or over and a regular income. Many Lenders may also include extra lending conditions.

R

Regulated – financial ‘products’ that are overseen by the Financial Conduct Authority (FCA). Lenders must follow a code of conduct and individuals are protected by the Financial Services Compensation Scheme (FSCS).

Repayment Schedule – The time period over which a loan will be repaid and the details of the loan repayment amounts.

S

Second Charge – A second loan, in addition to any other loan, that is secured against an individuals property.

Secured Loan – Also commonly known as a Homeownr Loan. A secured loan is only available to to homeowners. The loan amount is secured against the value of the property. The Lender has the right to repossess your property should you fail to maintain the loan repayments.

Shared Ownership – An agreement in which an individual owns only a percentage of the property. The remaining percentage is owned by a third party often a housing association. The individual may have a mortgage on the part of the property they own and pay rent on the part of the property they do not own.

T

Total Amount Repayable – The total amount of the loan plus the interest and any applicable fees.

Typical APR – The advertised interest rate that is offered to a minimum of 66% of successful loan applicants.

U

Underwriting – The process of verifying data and approving a loan.

Unregulated – Not covered and regulated by the Financial Conduct Authority (FCA).

Unsecured Loan – A loan that does not require collateral and is provided on ‘good faith’. Under the belief by the Lender that you can repay the loan based on your credit score, credit history and financial standing amongst other factors.

V

Variable Rate – An interest rate that will change during the loan repayment period.

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The Most Important Questions And Answers

c3In current times, the average person is faced with many situations that require him or her to have some form of wealth. A person in such a dilemma may consider taking up a loan from a reliable financial institution. When this happens more than once, intervention is then needed to sum up all the small amounts of money that a person owes and help the person pay them off in one instance.

Managing one single debt is easier than dealing with several debts that can be owed to any number of people and institutions. All the lenders each have their own fixed interest rates on the advances they give to people. Some of these interest rates are just too high, but one is forced to consider the option due to lack of funds.

The same lenders will each have their own set duration of time to pay back the debt. This is dependent on the amount an individual has borrowed. Some financial institutions give a person some reasonable time to pay back while others do not necessarily do so. This ability to control the duration of time that will be required to pay back the borrowed money is very important.

A person is encouraged to research the various benefits of consolidating his or her loans. One of them is that an individual no longer needs to deal with multiple institutions that demand payment as soon as possible. All the debts are paid to just one person or institution and the client is left to sign only one agreement rather than numerous agreements.

This process also drastically reduces the paperwork that companies have to deal with as it is also consolidated and put together by one company in the end. Many companies that are offering this service are very transparent and user friendly. Anybody can come forward and present their case for consideration by such a company.

The interest rate for the consolidated loan is usually the average of all the other interest rates that fall under this roof. This is very convenient to most people as it is fair and does not negatively affect the financial status of an individual.

The time to pay back the money borrowed is also calculated fairly. The installments are determined depending on the amount of money being dealt with at the end of the whole consolidation process. Debt consolidation loans should be considered by individuals who have financial problems at hand.