How To Choose A Good Debt Consolidation Loan

June 19, 2008

Once you have decided on debt consolidation, you now have to choose your debt consolidation loan product.  You have many choices, but not all of them will suit your purposes.  Therefore, you must carefully check each one of your options and consider the following factors before you choose the debt consolidation loan for you.


Interest Rate

Naturally, you have to find out what interest rate you will be charged by a certain debt consolidation loan.  If you are going to consolidate your existing loans, then you’d better find a loan that charges a lower interest than any of your current loans.  It doesn’t make sense to transfer your balance from a low-interest loan to a higher- interest loan, does it?


Apart from looking at the standard variable percentage rate (VPR), you also have to check the promotional VPR.  Most loan companies offer introductory loan interest rates to entice people into applying for a loan.  These introductory loans are precisely that – they will last only for a certain period of time.  Therefore, be careful about signing up for a debt consolidation loan that has very good introductory rates  yet have higher than average VPR afterwards.


Repayment Terms

When does the loan have to be paid in full, and how much minimum payment do you need to cough up every month?  These are the two most pertinent questions that you need to ask before you take up any debt consolidation offer.


Theoretically,  a loan with a short repayment period typically means greater savings since you won’t spend decades paying interest.  However, you also need to be realistic.  If you take out a short-term loan and miss out on a payment because the monthly minimum dues are too high and are much more than you can possibly pay, then your interest rates will soar when you default on a payment.  You will lose out more in the long run.


 So , before you take out a debt consolidation loan, make sure that the terms are manageable and attainable given the current state of your finances.


Credit Limit or Face Value

How much money will be lent to you? If you’re taking out a line of credit for debt consolidation, how much credit will be extended to you?  It is important that you know from the start if the amount of money the bank will lend you for debt consolidation is enough to cover all of your existing loans.  Otherwise, you will not succeed in consolidating all your multiple loan balances into one.

Don’t Get Into A Debt Dilemma – Mistake no 3

June 13, 2008

Mistake 3: Consolidating Everything


Many decide to consolidate every single one of their debts into just one debt consolidation plan. Some even do this despite the fact that some of their debts are already on one consolidation plan or another, simply because the new scheme offers a longer term.


Consolidating everything rarely works especially if you have a very large amount to deal with or if you’ve already got some debts under another scheme. Other shorter-term schemes often offer lower interest rates in lieu of the longer time to pay.


 It’s recommended that you take the offer with the lower interest because you have to pay less in the long run and end up paying debts for less time, even if you have to pay more in the short term.


Debt consolidation isn’t just about lifting the pressure of your debt deadlines from your shoulders, though that’s an obvious aspect of it. Debt consolidation doesn’t keep your debts at bay forever and it doesn’t pay off your debts either. All a debt consolidation scheme gives you is time, which would just be wasted if you didn’t have a predefined plan on how to use it.


Zulika van Heerden provides valuable information on her site on how to live a debt free life.
To read more tips and techniques like the ones in this article go to:

Don’t Get Into A Debt Dilemma – Mistake 2 of 3

June 10, 2008

Mistake 2: Consolidate then Splurge


Mistake #2 is considerably worse than the one prior because you actively contribute (to the detriment) of your debts. Again, this stems from the idea that debt consolidation schemes magically hold off your debts for indeterminate amounts of time, or even eliminate them completely.


The leeway afforded to you by a debt consolidation plan should be used for working towards cutting down the debts, not adding to them.


You can hardly call a spending spree ‘cutting down,’ especially when you’re in so much debt already. This pattern of getting yourself into more debt right after promising to pay off your previous ones will, in the long and short run, work to the detriment of your budget, your finances and your credit rating.


Zulika van Heerden provides valuable information on her site on how to live a debt free life.
To read more tips and techniques like the ones in this article go to:

Don’t Get Into A Debt Dilemma – Mistake 1 of 3

June 9, 2008

Debt consolidation can seem like a breath of fresh air, especially if you’ve been dogged by your debt and credit problems for a long time. Your creditors are suddenly off your tail, you have a credit rating to speak of again and you can breathe a sigh of relief.


But this sense of security may very well be false, particularly if you commit three common mistakes made by many who choose to consolidate their debts. You’d best avoid those same mistakes else you’re likely to find yourself running through the whole cycle of indebtedness all over again.


Mistake 1: No Plan at All


It might sound ridiculous but many have participated into a debt consolidation scheme without any sort of idea for getting rid of that debt eventually. It’s very foolish to enter a debt consolidation scheme without a concrete action plan for reducing and gradually eliminating your debts.


Remember, debt consolidation schemes merely give you some leeway when it comes to deadlines for paying off your debts, but they don’t hold off debts indefinitely.


Consolidation schemes still have deadlines for paying your bills that you must eventually meet. To make matters worse, your consolidated debts accrue interest and other fees the longer they’re left stagnant, so you’d best not forget about them.


Zulika van Heerden provides valuable information on her site on how to live a debt free life.
To read more tips and techniques like the ones in this article go to:

Bad Credit Cards For Better Consolidation

May 29, 2008

Unsecured methods of debt consolidation are among some of the most available debt consolidation options out there because they do not require you to secure the debt against anything.This is in contrast to secured loans such as mortgages which require you to put something up as collateral or security.  However, unsecured loans have a major qualification in the form of a good credit rating.




You got to have a healthy credit score before you can even consider getting a credit card with a decent interest rate. If your credit score is bad enough that you cannot get a good credit card anymore, there is a fix available for your situation. The solution comes, as ironic as it might sound, as a bad credit card.




Why Bad Credit Cards?




Now, do not take the term the wrong way. Bad credit cards are not bad per se or detrimental to your credit score. In fact, they could be just the opposite when used correctly. Bad credit cards are just called that way because they are specifically targeted for people who have bad credit histories or a bad credit rating. As you might expect, they do not require much besides an application form.




You can easily acquire a bad credit card and many banks and financial institutions offer them. The only drawback with bad credit cards is that they have a higher APR than the usual credit cards. That means you will have to make prompt and regular payments for your credit cards. But besides saving yourself from the interest, there is another important reason for you to make prompt payments, as you will see later on in this article.




Being Bad to Be Good




Because they have few requirements, bad credit cards are the easiest (and perhaps the only) available option for you. And getting one could hold the key to a better credit score.




Get yourself a bad credit card and then do some light spending on it. Pay a couple of utility bills, buy yourself an inexpensive outfit, just do anything to use up a little of the credit extended to you. Then when the bills come, pay them as quickly as possible; don not let the deadline dawn without your having paid your dues. Repeat this process every month. What this does is it establishes you as a debtor who pays promptly. Your credit card company will notice the pattern and, pretty soon, so will other creditors.




By using up just a little of your credit line, you make sure that the costs are still easily payable at the end of every month and that you do not get hurt by the higher-than-average APR. Using this technique would not improve your credit score overnight, that is for sure. You would not get any noticeable effects for about six months and it could take about a year for the paying pattern to nurse your credit rating back to health.




If your loan- or debt-related needs are not immediate or very urgent, taking this course of action is well worth the effort for its benefits on your credit score. That same credit score will be key in getting better terms on your next credit card or, indeed, just about any other method of debt consolidation available.




Zulika van Heerden provides valuable information on her site on how to live a debt free life.
To read more tips and techniques like the ones in this article go to:

Which Bills To Pay First

May 27, 2008

When prioritizing post-consolidation payments, your debts and your taxes must be at the very top of the things that you have to pay.


In a situation where you are in debt both to creditors for their loans and to the government for your taxes, both of them have the priority and the power to foreclose on your properties or seize things that you own.


There are already laws and structures in place to make it easier and faster for the banks, the lending institutions and, of course, the government to seize assets. It’s basically for this reason that you should put payments to them at the top spots on your list.


If you skip out on payments to them for too long, you not only have to deal with the process of seizure or foreclosure. You also have to deal with recovering your solid assets – your house and your car, for example – which could have served as a backup plan in a financial emergency.


Make an Agreement


Of course, there are other debts that you’ll also have to pay.


Credit card debts and accounts with merchants are very common examples of these. In terms of payments, the very big difference between these kinds of debts and the debts that you owe to banks and the government is that the repayment schedule can be discussed.


Debt problems are very real and very widespread so it’s not uncommon for these creditors to hear about debtors who can’t pay due to other debt obligations. If you have debts to creditors like those, try calling or writing them and then asking for new payment terms. Make sure to explain your circumstances because they’ll need you to give a really good reason for not giving them their money on time.


These kinds of debts are low on priority not only because arrangements can be made regarding their repayment, but also because it will be very hard for credit cards and merchants to seize your home or your car.


After you’ve arranged your debts and consolidated some of them, it’s very important to know not only how to pay debts but how to pay them effectively. There are some debts that will take a higher priority because your creditors in those debts can take faster and more drastic measures to seize your assets as payment.


When planning a debt recovery scheme, identify the type of each debt clearly and list them in order of priority. That should help you stick to a good payment schedule and gradually whittle away at your problem of debt.


For more debt and mortgage related articles, go to :

Debt Consolidation can Save Your Credit Record

May 26, 2008

An important feature of consolidating bills is that it helps your credit record.


As you accumulate more and more debt, you damage your credit record. If you have missed payments or carry excessive credit card debt, your credit score suffers.


When you consolidate your accounts and pay off your outstanding debts, you stop the damage being done to your credit. You show accounts that are paid off which helps with repairing your credit.


So how does that benefit you? A better credit score means lower interest rates in the future for things like a mortgage, car loan or home refinancing. In the long run, it can save you thousands (maybe tens of thousands) of Rands