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Debt Consolidation Loans with Bad Credit
Staff - Mortgage Lenders Plus.com
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Going after a debt consolidation loan with bad credit can appear, at times, as an exercise in futility. For some people, debt consolidation is necessary because someone has lost a job or been disabled and the family income has dropped significantly. But for too many of us, debt consolidation is necessary because we have spent beyond our means and can’t make the monthly payments on credit card bills and other loans. In that situation, we are borrowing money to pay back borrowed money.
It seems like a self-defeating notion under those circumstances. Those of us who need debt consolidation with bad credit also need to change our spending habits drastically. A reputable credit counselor can help with that process by forcing a hard look at the monthly budget and forcing you to find a way to live within your means. If you can then begin paying off your credit debt, you are fortunate.
If instead you need to obtain a debt consolidation loan with bad credit, the first place to look is probably at a second mortgage on your home. A home equity loan or line of credit, if that option is available to you, will probably have an interest rate of eleven percent or more – depending on your credit score. That’s for a loan of fifteen years duration, in the $30,000 range. The bonus on a home equity loan is that the interest will be tax deductible. If your credit debt is less than say, $30,000, a home equity line of credit (HELOC) will allow you to borrow only the amount you need. The temptation of an open line of credit can be a risk – it will require newfound discipline.
If you are not a homeowner and must opt for an unsecured debt consolidation loan with your bad credit rating, you are going to encounter high interest rates. The length of the loan will lessen your monthly payment burden and in time, you’ll retire that credit debt if you don’t engage in any more retail therapy. What you probably won’t be doing is saving any money in the process. You’ll be paying on a longer term loan with substantial interest, even though that interest rate may be lower than the ones attached to your credit cards.
If you want a thorough analysis of what debt consolidation with bad credit will cost you, start by soliciting three or four bids on whatever type of loan is available to you. Take the term and interest rates of those loans and the information on your current debts, and use the Mortgage Lenders Plus Debt Consolidation Calculator to get a cost comparison with, and without consolidation. The calculator will give you a clear picture; you can find it at Related Articles:
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