Debt consolidation loans from various financial institutions in Cincinnati 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 Cincinnati, 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.
Cincinnati – Personal Loan to Consolidate Debt
Debt consolidation loans have become a popular way to repay unsecured debt. The reason most people use a consolidation loan is because they have multiple debts, they're looking for a lower interest rate and they want to reduce their monthly payments. However, there are several risks involved with debt consolidation that need to be examined before taking out a consolidating loan.
A debt consolidation loan is simply combining all unsecured debts into one loan by either taking out a secured or unsecured loan. A secured loan means there is some asset or form of collateral backing the loan which can be liquidated if the borrower stops making payments. The most typical form of collateral used for a secured loan is a home. An unsecured loan is a loan that is only backed by the consumer's signature and not by collateral. Interest rates for unsecured loans are usually higher because the risk is higher for the lender.
There are several loans available to consolidate debt such as:
- Home Equity Loans
- Secured Loans
- Unsecured Loans
Home equity loans can be used to consolidate debt. The benefit of a home equity loan is a much lower interest rate than an unsecured debt, such as a credit card. Yet because the term length is longer for a secured loan, the borrower ends up paying more than the original principle of the debt. The home owner also jeopardizes the security of their home by increasing their monthly payments because if they are unable to make the higher payment, the lender can foreclose on their home.
Consolidating Debt with Unsecured Loans
Unsecured loans are also used to consolidate debts. Typically, unsecured loans have a fixed interest rate that is somewhat lower than the interest rates of the other unsecured debts. The two primary advantages are a lower interest rate and the convenience of only one payment. However, most lenders offer a short-term low interest rate that can eventually balloon to more than 20 percent. Lenders may also require high credit scores and other strict qualifications for unsecured loans since the only way to recover the borrowed amount, should the borrower default on the loan, is to take legal action.
Any consumer contemplating a debt consolidation loan should first consider the risks involved. A viable alternative to debt consolidation is debt settlement. Having a professional negotiate and reduce your overall debt can save you money and prevent needlessly risking your home to pay of debt.
Debt Consolidation Scam Claims Repayment Unnecessary
Students who are facing a challenge to pay for their education find a good financial aid in the form of student loans. A majority of students have to leave their college with a huge debt burden quite unfortunately. Apart from this, most of these students have to write multiple checks for their loan repayment each month as they are often obtained through various lenders. Consolidation is certainly a good solution to their problem.
Loan consolidation - What is it actually?
Loan consolidation is about adding all your student loans into one so that you have a single repayment plan and a single lender. Home mortgage refinancing and student loan consolidation are quite similar to each other. During consolidation, your current balances are met while the total balance rolls over to the consolidated loan. Thus, all you need to deal now is just a single student loan. Besides students their parents may also get their loans consolidated.
Can I consolidate my loans?
You should meet the following criteria:
You must fall within the 6-months grace period after your graduation, or you need to have started with your loan repayment.
The total balance of your loans that meet the criteria should be over $7,500.
You should have 2 or more lenders.
Your student loans have not yet been consolidated, or when you have returned to school and acquired fresh loans since your consolidation.
The following types of loans can be consolidated:
National Direct Student
Unsubsidized and Direct Subsidized
Unsubsidized Federal Stafford and Federal Subsidized
Direct PLUS and Federal PLUS
Federal Consolidation and Direct Consolidation
And many more.
Where can I get a consolidation loan?
You may get your loans consolidated through the U.S. Department of Education or a credit union participating in the Federal Family Education Loan Program or through a bank. Irrespective of where you get your loans consolidated, the terms and conditions usually remain same. Make sure you get in touch with the lenders who currently hold your loans regarding this.
If you have all loans through a single lender, you should get them consolidated with him.
While deciding about consolidating, make sure that you choose to do it only when you aren't going back to school and applying for fresh loans. In this way you might try to be sure that you'll achieve the best deal out of consolidation. The rate of interest doesn't usually vary between lenders, but you might achieve discounted rates through some of them for prompt repayments. Some of them will even offer discounts for obtaining the right to debit your account for monthly payments.
Your student loans may be consolidated any time during the grace period of 6 months or once you begin with your loan repayment. You may achieve a lower rate of interest if your loans get consolidated within the grace period. However, it is a better idea for you to wait till you reach the fifth month of your grace period and then consolidate your loans. This way, you won't lose the remaining grace period. It takes about 30-45 days for the entire consolidation process to get completed.