-
Step 1
Shop around. Not all consolidation loans are created equally. Inquire about debt consolidation loans at reputable financial institutions. As with all bank services, it's important to use someone that's established and trustworthy. You wouldn't open a checking account with a company that sent you a spammy email, and you shouldn't trust them to give you a consolidation loan, either.
-
Step 2
Steer clear of companies that promise to reduce debts. You owe what you owe, and companies that promise to reduce those amounts are making promises they can't keep.
-
Step 3
Ask about fees. Never pay upfront fees. Some small fees are sometimes part of the process, but anything over $100 should be a warning sign.
-
Step 4
Once you find a reputable bank that you want to use to apply for your loan, consider the following before you sign your name to their paperwork.
-
Step 5
Make sure you've got an accurate picture of all the creditors that you owe. Take some time to get a copy of your credit report, and write out all of the debts that you've incurred. You don't want to take out a loan, only to find that you owed a few other creditors that you forgot to include in the consolidation.
-
Step 6
Ask what your new payments will be, and what new interest rate will be. The monthly payments must be considerably less than your current combined payments, or you won't be able to keep up the payments on the new loan. The interest rate must be lower, or you'll end up paying more in the long run.
-
Step 7
Find out if the consolidation loan will adversely affect your credit. Consolidating debt with a reputable bank can usually help your credit rating (as long as you keep up with the payments), but be sure to ask questions if you end up taking out your loan with a somewhat shady company.
Comments
HowDragon said
on 12/15/2008 Great things to consider when applying for a debt consolidation loan! Thanks! 5*!