subject: Consolidation Services - How Debt Consolidation Services Work [print this page] Exploring consolidation services to help you get out of debt can help you take some pressure off your wallet. All debt consolidation services are not scams. The right service can help you increase the cash you keep in your pocket each month while you eliminate your debts in a timely fashion. What Is Consolidation? To put it simply, this is when you take out a loan to pay off other debts. For example, Sally has 3 credit cards - one major credit card, one department store card, and one gas station card - all with high balances. Sally also has an unsecured personal loan and an expensive outstanding medical bill. These are five separate bills that she pays every month and although she makes her payments on time, her monthly cash flow only allows her to pay just the minimum payments on her credit cards and loans. This is good because her credit report reads well, but her long term debt responsibility and monthly financial situation could be even better. Get a Free Debt Consolidation Quote - Click Here! When you have debts with high balances, the problem with making minimum monthly payments is you never seem to actually pay the balance off. Each month you faithfully make that payment, but the principal amount doesn't seem to reduce by much. Making minimum payments on tens of thousands of dollars in total debt could take you more than a decade to pay off. This is the situation with Sally. Her credit score isn't bad because she tries not to be more than 30 days late with her payments, but she is on the fast track to nowhere. At this rate, she will be paying these same bills for the next 15 years. Sally should consider the consolidation services that are available to help her. How Debt Consolidation Services Work A debt consolidation counselor will ask you about your current financial situation and may ask for permission to pull your credit report. This way they can make a true and total assessment of how much you currently owe to your lenders and creditors. Please do not be embarrassed or feel awkward talking to a counselor about your finances. Keep in mind you are not the only person with lots of outstanding bills to pay. (As a matter of fact, it is pretty normal for a person to have lots of outstanding bills to pay.) After your credit score and total debt is determined, the consolidation service will find you a loan with an interest rate that is lower than the interest rates you are paying on your current loans and credit cards. This loan will be an "installment loan" that has a monthly payment that is significantly lower than the sum of your other bill payments. Installment loans are great to consolidate your debt because they come with an end date. An auto loan is a great example of an installment loan - clear payments and an end date. You know how long it will take to pay your car off, just as you will know how long it will be to pay your debts off. If Sally uses a consolidation service, they could help her roll the five bills that are taxing her wallet every month (three credit cards, a personal loan, and an outstanding medical bill) into one consolidated installment loan payment that gives her major relief. She could also eliminate her debts within months, not decades. It is not uncommon for people in situations similar to Sally's to qualify for 18 to 60 month loans with fixed payments that are less than half of the sum of their previous minimums. Click Here to request a Free Quote Online and see exactly which Free Debt Consolidation Programs will benefit you.
I highly recommend the link above if you want to see exactly how much you can save!
Consolidation Services - How Debt Consolidation Services Work
