Unsecured loan is normally referred to credit cards. Credit card debt consolidation is the process of accumulating all the unsecured credit card debts and transferring it to a loan with another lender. The main goal of an unsecured consolidation loan is to obtain short term debt relief when financial problems strike.
The debtors are able to obtain a better interest rate and a lower monthly payment so that they can pay off their debts at a faster pace. They can also free up a lot of their monthly income so that they are not stressed out about affording their commitment in their daily life.
In order to obtain this specific loan successfully, you need to search for the loan providers carefully so that you can really control your finances in the right manner. You must bear in mind that your aim is to become completely debt free, not just temporarily fix the problem. Here are some practical steps for your kind reference.
Step 1: Sum total of your debt
Calculate the total amount of your current unsecured debt and list down the interest rates separately.
Step 2: Start taking actions to look for unsecured consolidation loan
Start looking for debt consolidation loan providers. Get the details of the loans provided by them, especially the interest rates offered as well as the terms of repayment. Stick to the important principle where an unsecured consolidation loan must offer lower interest rate if compared with your existing debts. It is meant to lower your outstanding balances, not to increase it.
Do thorough comparisons. If you don’t have any idea with the figures, you are advised to get an external financial advisor or consultant to assist you before taking up the loan.
Step 3: Find out whether the loan provider is licensed
In United States, most of the state governments are putting in hard effort to protect their citizens. They require the debt consolidation companies to obtain license. Hence, in order to be secured, you are advised to contact the Department of Banking or Consumer Affair in your state to find out whether the loan provider you consider is licensed.
Step 4: Look-Read-Understand your loan agreement
Study the loan agreement carefully. Make sure that all the terms and conditions stated in the contract are fully disclosed and explained before signing. Make sure that you are fully aware of the following: The total loan amount, the commencement date of repaying the loan, duration of loan repayment, your closing cost, additional fee incurred, etc.
Step 5: Don’t place yourself in financial risk!
Obtaining an unsecured loan doesn’t need a lien on your properties. Make you that you don’t place yourself in financial risks. Avoid those lenders that require collateral.
By getting the unsecured debt consolidation loan, you will be able to pay off all your high interest unsecured debts. You just need to focus on one single loan. By doing so, you can avoid yourself from receiving the threatening and intimidating letters and phone calls.
Hence, you don’t have to be stressful each time when you open your mail box or when your phone rings. At the same time, by getting a low interest loan, you can actually save a lot of money if compared with your original debt. Furthermore, your credit rating can be maintained. You don’t even need to stop making payment to negotiate with your creditors. As a result, your credit score will not be affected at all.
Last but not the least; getting a good consolidation loan will definitely help to get you out from debt. Be a smart consumer. Search for the right one and release yourself from stress.