Many people who are faced with significant amounts of debt will consider a debt consolidation program in order to get a better handle on their finances and lower their monthly payments. Debt consolidation programs will usually come in the form of a single loan which will then be used to pay off all other loans, streamlining everything into one single debt. Read on to figure out if you qualify for a debt consolidation program.
Who Needs Debt Consolidation?
Just about everyone has some form of debt. In fact, the average American has about $8,000 in debt, usually in the form of credit card debt. But many others have a lot more debt than that, and are struggling to make all of their monthly payments. This is especially the case if the debt is being charged sky-high interest rates, which can quickly snowball into a financial nightmare, where all you can barely manage is to pay the interest, never mind the capital. So, for many people, starting a debt consolidation program makes a lot of sense because it gets everything under control.
Since a debt consolidation program entails applying for a new loan, determining who qualifies for one is essentially a question of credit standing. If you have good, solid credit, with no defaults on your record, and no missed payments, you are practically guaranteed a debt consolidation loan. You will probably qualify for a debt consolidation program even if you have a less-than-perfect credit history, but you won’t get the best interest rate that everyone wants.
Understanding Debt Management
It’s important to remember that the term “debt consolidation” is a part of debt management. This means that when you agree to make all your payments on time, and stop taking on more debt. Your lender or lenders will agree to lower your interest rates, reduce your payment to something you can handle, and let up on missed payment fees. Many banks and lenders are offering what they call debt consolidation plans to people, but all it is high-interest loans that you don’t want.
If you’re wondering if you qualify for a debt consolidation program, be sure to visit with a financial advisor or a debt counselor and go over all your choices with him or her. You need the best advice possible when it comes to improving your financial picture.