Bill Consolidation Loans May Only Lower Monthly Payments
In many cases, bill consolidation loans can be a blessing, but in others they can be a curse. Do not let the pressure of have a lot of individual payments every month pressure you into taking out bill consolidation loans until you do the math and determine if it will help you in the long run. You should total up the debt to determine how much you will need to pay off all the loans and determine the total payoff with interest over the life of the loan.
Depending on the type of loans you have, the total of some of them may drop if the loan is paid off prior to its due date. Rarely will a loan include a penalty for early termination of the loan, but in the past it was frequently written into the loan agreement. With bill consolidation loans it is possible that the total payoff of the existing debt will be reduced by paying them off in full.
Once you know how much you need, consider how much you would pay if you remained in your current state of indebtedness. To really be helpful the monthly payment for bill consolidation loans should be considerably lower than your current monthly payments. While a 10 percent savings may seem like a lot of money at the time, over the length of the loan the total amount paid back could end up being much higher.
Check With Creditors About Balance Reductions
Depending on your credit history with a particular lender, it may be possible to negotiate a lower pay off. For example, if credit card debt has put you in over your head, many times credit card companies will be willing to work with you to take off any late payment fees if you are able to pay the principal balance in full. Before setting a final amount fo bill consolidation loans check with all of your creditors to determine if any are willing to work with you on the pay off amount.
If you are in hock up to your ears and debtors have been harassing you for payment, they may be willing to work with, although some may want to see some sort of good faith effort on your part before agreeing to taking a lesser amount. If you are successful in finding a lender to issue you bill consolidation loans, remember to get a receipt from the bills being paid off indicating the debt is paid in full. This will protect you in the future if they inadvertently claim otherwise in a report to the credit bureaus.
