Consolidate Debt Loans Guide And Lender Tricks

Written by admin on November 27th, 2010

Many people in the US,UK and other industrialize countries are burdened by credit card debts, store card debts, unsecured personal loans and bank overdrafts. Does consolidate debts loans be the option? These kinds of debts incur very high interest rates and before you know what hit you, you are already in big debt. The other problem with these types of debts is they are easy to get and will land you deeper into debts.

The benefit in a consolidate debt loans is you would be able to pay all your existing debts in one easy monthly payment or settlement. The other benefit of a debt consolidation loan is by securing the loan on property (i.e. your home); you can borrow at a much lower rate of interest and reduce your monthly repayments by up to a half.

There are various types of programs to consolidate debt loans. This type of loan can be either secured or unsecured. Something of important value is used by a secured loan to protect the loan amount. The most familiar sources of security are the home. The risk is less for the lender with the low interest rate. But the unsecured loan is of some risk for the lender.

They charge a higher rate of interest rate and include some restrictions against the borrowing.

If you ever thought that consolidating all your credit cards into one easy loan payment and solve all you debt problems, think again.

There are pitfalls to this type of borrowing. Most people when they realize that their monthly payments are a lot less, they start to slack off and start spending more. If you are one of those, then consolidating your debts might not be the smartest idea. It will actually land you more in debt problems than before. When planning to consolidate all your credit cards and other unsecured loans, make sure you have the right psyche or discipline to go forward with a debt consolidation loan.

The right time to consolidate your debts is when you have temporarily slipped into debt (perhaps due to a change in personal circumstances) and want to get out of debt faster. It can cut your interest rate and your monthly repayments and simplify your finances, putting you back in control.

Be mindful of the tricks too, that the lender will do to entice you to get into their agency or company. Consider the following tricks they do.

They will convey to you a sense of urgency and that you have to do it right now or lose out on it.

They will claim that now is the best time to consolidate debt loans because interest rates are low.

They will use the low interest rate now and that sense of urgency to try to get or lure you into doing your consolidation now before the interest rate will go up.

They will offer X amount of percentage discount on the interest rate if your payments are made by automatic payment direct debit from your bank account. This to me is a red flag. Do not give access to your bank accounts.

They will try and ask for your student account number which in most cases it is your social security number. If you give this information to them, they can find your record on the national student loan data system (NSLDS). Here, they can see if you are eligible or not. This is a way for them to make you give your social security number.

My advice, consolidate debt loans when you have the discipline and commitment to improve the management of your debts. Do not forget to bear in mind the tricks employed by the lenders for proper guidance when you do consolidate debt loans.

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