Getting Low Interest Debt Consolidation Loans with Bad Credit

Locating low interest debt consolidations loans can be catch 22 because because the people that need them have bad credit and have difficulty qualifying for the consolidation loans.  A consolidation loan can ease the load of significant debt.  The consolidation loan will pay several lenders off in one broad sweep and the person will then owe only one single payment to the new lender each month. The loans are risky for lenders because they are typically large and are made to people in compromised financial situations.

Who is Eligible?

To be eligible to consolidate your debt, you must have a significant amount of debt with many lenders. Typically, there is a minimum for the lender anywhere from $5,000 to $30,000. The minimum may be contingent on your income or assets. If you simply have a lot of debt on only one or two credit cards, refinancing or debt settlement may be a better option.  Debt consolidation loans are better suited for those with higher loan balances.

Which Lenders are Best?

Banks, Online lenders and debt settlement companies are good options to.  Take a close look at each offer and consider fees, prepayment penalties and rates.  Also, keep in mind that when searching many of us are in desperate situations and there are lenders that will exploit our vulnerability.  It's easy to forget to research when we are stressed out with collection agencies or a looming bankruptcy.  It's best to contact many lenders and banks.  If you want face to face time, banks offer the comfort of meeting arepresentative and the added bonus of  FDIC insurance.  Online quotes are also offered without a cost and many offer a phone number to speak with representatives for more information.  Debt negotiation companies are also an important option, they may be able to get lower cash settlements than you would without them.

Are There Government Loans?

Government loans are not typically provided for personal use. There are a few exceptions for student debt.  Tuition, book, or living expense loans may be consolidated through the Higher Education Act loan programs. There are many options to help recent graduates meet their financial obligations such as income contingent repayment schedules. You may also be able to consolidate debt on housing loans through government-insured private lenders. The FHA, Federal Housing Administration, has recently taken large strides to keep people in their homes by lowering their payment. In particular, you should consider FHA insured loans if you have an adjustable rate where the interest rates have adjusted higher recently.

How to Complete my Application?

To get the best loans, regardless of the lender, you need a good application. Address all late payments or defaults with a personal statement or affidavit.  You should also prepare character references or income statements from your employer. The most important factor is showing extenuating circumstances existed and caused lates and to stress that your ability to make payments in the future is not impaired. It is also best to seek our consolidations before your debt is sent to collection agencies because once the debt is sent to another agency, your credit score will take a big hit and it acquiring a new loan will become more difficult.


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