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05-Mar-2020 15:25

Before you apply for a debt consolidation loan, you should consider alternatives, figure out how you’ll make payments and make sure you’re finding the best rate available.Credit cards with zero percent APR on balance transfer offers allow you to transfer existing credit card balances to that new card. It’s essential to have a plan for how you can make the new payments, especially if you’ve previously struggled to keep up with minimum payments on your balances.Once you know how much you can realistically allocate to paying down your debt each month, you can use the amount to determine terms for your loan.The amount you pay on your debt consolidation loan each month will vary depending on the amount you borrow and how many years you will take to repay it.For the length of the introductory period, you can make payments to reduce your balance without accruing interest. To avoid missed payments, penalties or default, you’ll need to create a budget that allows you to make payments on your debt consolidation loan.Assess your current debt total by listing out your debts, including credit cards, student loans, car loans and any other accounts.

Your credit history will significantly influence the interest rate quoted for your debt consolidation loan, as most lenders use risk-based pricing.“Make sure you have plenty of cushion in there so if something happens and you had to sell your home, or you had to move ...you don’t end up losing your home.” Repayment terms can be 10 years or longer, and if the value of your home drops during that period, you may owe more than your home is worth.Most lenders offer rate quotes, which are soft inquiries on your credit and have no effect on your credit score.When you do a hard inquiry during the final approval process, it will be reflected on your credit report. Although debt consolidation loans are a legitimate solution for eliminating debt, some other debt consolidation options are scams.

Your credit history will significantly influence the interest rate quoted for your debt consolidation loan, as most lenders use risk-based pricing.

“Make sure you have plenty of cushion in there so if something happens and you had to sell your home, or you had to move ...

you don’t end up losing your home.” Repayment terms can be 10 years or longer, and if the value of your home drops during that period, you may owe more than your home is worth.

Most lenders offer rate quotes, which are soft inquiries on your credit and have no effect on your credit score.

When you do a hard inquiry during the final approval process, it will be reflected on your credit report. Although debt consolidation loans are a legitimate solution for eliminating debt, some other debt consolidation options are scams.

They use collateral, such as home equity used to secure a home equity loan, and generally have better interest rates than unsecured ones.