Debt consolidation loans from various financial institutions in East Lansing are one option to consolidate debts. If the loan has better terms than the consumer debt getting consolidated then the result will be lower interest rates and lower debt payments. The problem usually is finding a debt consolidation loan that has more favorable rates. Doing so all most always requires the debtor to secure the loan with collateral. More often than not this collateral is a residence and the loan is a home mortgage.
An Unsecured Loan
If there is no collateral available or the debtor does not want to provide any then the only option is to get an unsecured loan. Unsecured loans with better interest rates and payment terms than standard “off the shelf” consumer debt can be very hard to find in East Lansing, especially in today’s credit markets. If credit is not perfect then most likely only a subprime personal loan to consolidate debt will be available. This has a very low chance of improving the debtor’s financial situation and will most likely damage it.
East Lansing – Personal Loan to Consolidate Debt
Being in money trouble is seldom planned; it frequently happens because of unemployment or sickness or disease. Sometimes consumers accumulate massive bills because of carelessness or because they just do not appreciate how charge cards work. What do you do if you're in financial trouble? Debt consolidation is frequently touted as the answer to financial problems, but a survey suggests that two thirds of people who receive debt consolidation loans find themselves right back where they started - owing more money than they can repay.
How do debtors find more debt using the tool that's supposed to repair it?
The main cause of renewed debt is the inability of consumers to stop spending after turning to a loan to combine their financial obligations. Many, if not most, people with debt trouble only quit spending when they run out of credit. When the cards are full, you cannot spend any longer. Tapped out credit cards make a fairly effective deterrent against spending, but they also come with penalties and fees for exceeding the credit limit. When you take out a new loan and use it to eliminate all of the other ones, your credit cards are now unencumbered - you owe nothing.
Consumers frequently succumb to the temptation to start using their credit cards again once the outstanding balances are gone. The suggestion that the debt is gone after obtaining a consolidation loan is fraudulent; the debt has been moved to a different place. If you begin spending once again, you will not only end up in money trouble, but you will be in more trouble than you were before, as your ability to accrue debt has actually improved. It would seem that few people adjust their spending habits; the majority of people simply resort to their old ways. Smart consumers know that they can't spend like crazy after obtaining a debt consolidation loan, as the objective is to eliminate the debt.
Experienced credit counseling is a good step towards clearing up those financial problems. A financial professional can point out the potential pitfalls of seeking more debt so that you might repair your finances. Credit counseling agencies can help you learn to pay off your bills instead of allowing them to grow again. Consumers need to understand the prospective obstacles and be ready for the difficulties that accompany solving money problems. While it may not be a quick answer, repaying several credit card balances or debts into one affordable payment via consolidation can be a great way to become financially independent.
Why Consolidate Student Loans
Going to College costs a great deal of money. No only do you have to consider your tuition, you need to pay for textbooks, room and board. Students use student loans to pay for a number of their college needs. Majority of these students have multiple student loans. Each loan has a different billing cycle, creditor, and interest rate. One way to make paying these loans easier is loan consolidation. Loan consolidation is having all your student loans turn into one new loan. This one loan is handled by one creditor. There are two methods of loan consolidation: Federal and Private loan consolidation. When looking for a loan consolidation company that's right for you, you need to consider their interest rates. Interest rates are a major part of any loan.
Federal loan consolidation is funded by the U.S. Government or the U.S. Department of Education. Either the Government or the Department of Education combines your multiple student loans into one new loan. The interest rate on Federal Loans change according to the 91-day Treasury bill or T-Bill. This may vary each year, each May. Federal Loan Consolidation rates are set on the US Treasury and by the Congress. The Federal interest rate is the weighted average of student loan interest rates. The interest rate for Stafford loans will be the T-Bill plus 1.7%, while for federal PLUS loans, the rate is the T-Bill plus 2.3%.
Federal loans are currently at a fixed rate, but that can change. Originally, the federal interest rate was a fixed rate, later turned into a variable, but on July 1, 2006 it returned back to a fixed rate. With federal loans there is a possibility it may change in the future. Federal loans include Stafford Loans and PLUS Loans.
Stafford Loans are fixed-rate loans. For Stafford Loans you have subsidized and unsubsidized Stafford Loans.
For Subsidized Stafford loans that are paid out to graduate and professional students, the interest rate is fixed at 6.8%. Interest rates for subsidized Stafford loans, for undergraduate students are:
- For loans first paid out between July 1, 2006 - June 30, 2008, is fixed at 6.8%.
- For loans first paid out between July 1, 2009 - June 30, 2010, is fixed at 5.6%.
- For loans first paid out between July 1, 2010 - June 30, 2011, is fixed at 4.5%.
- For loans first paid out between July 1, 2011 - June 30, 2012, is fixed at 3.4%.
- For loans first paid out between on or after July 1, 2012, the interest rate is fixed at 6.8%.
For Unsubsidized Stafford loans, the interest rate is fixed at 6.8%. This is disbursed to undergraduates and graduate students.
The interest rate for PLUS loans first paid out beginning July 1, 2006 is fixed at 8.5%. The rate on PLUS loans first paid on or after July 1, 1998 but before July 1, 2006 is variable and may change annually on July 1 but will never exceed 9%. The current interest rate is 3.28%.
A private loan consolidation company is a private creditor or company. Their interest rates vary. Interest rates are based on either LIBOR (London Interbank Offered Rate) or the prime rate. The credit history is also considered for the student and co-signer. These loans are variable or have a fixed rate that changes according to the agreement in the promissory note. In some cases some private student loan consolidation loans could be the same rate as federal to compete with federal low interest rates.