Obtaining debt consolidation loan is one of the common financial solutions nowadays. This loan can either be in the form of a home equity loan or a personal debt consolidation loan with no collateral. This financial solution lumps a consumer’s debts into one neatly wrapped loan with lower interest rate and lower monthly payment. Although it is popular, it doesn’t mean that everyone can be qualified to apply for the loan.
There are 2 main reasons for the financial institutions to reject the loan applications:
- The applicants have very poor credit score
- The applicants are unable to provide the lenders with collateral
When your application is being rejected, please cool down. Find out the cause of failure. If you have already known that your credit rating shown in your latest credit report is poor, you are supposed not to submit your loan application to the traditional financial institutions. They will definitely reject your application because they are not willing to take high credit risk by offering the loan to you.
Hence, you are advised to look for the right place. You are recommended to search for the debt consolidation loans which are specially designed by those lenders for people with bad credit. Most of the people with bad credit can successfully obtain the loan to improve their credit score.
Don’t be upset and disappointed when you still fail to obtain the bad credit debt consolidation loan even hard effort has been made. It is not a big deal. According to many financial analysts, most consumers who utilize this loan to pay off their existing debts actually end up with even more debts because they don’t have proper skills to handle their debts. There are in fact many better alternatives for you to consider besides taking up this loan.
When your debts become overwhelming and yet you fail to obtain debt consolidation loan, what can be done? Here are the alternatives for it:
1. Secured Bad Credit Personal Loan
This loan offers lower interest rates and lower monthly repayments if compared with debt consolidation loan. It is meant for those people in debt with securable assets.
2. Debt Management Plans
If you don’t possess any asset, you are suggested to take up a debt management plan. It is a debt solution which allows the debtors to manage their personal debts without borrowing any additional money. The debtors will have an informal agreement with their creditors.
They agree to make a monthly repayment to their creditors through an intermediary, i.e. a professional debt management company. By taking up this plan, the debtors are able to freeze the high interest rate and other finance charges. It helps to reduce their financial burden.
3. Debt Counseling
Through this program, a counselor works with you as well as your creditors to assist you to reduce your interest rates and monthly payments. At the same time, the counselor also assists to reduce the amount of time to pay off the debt.
4. Declaring bankruptcy
This will be your last choice. For people with serious debt, declaring bankruptcy will be the right answer. Don’t be ashamed for doing this. You still can rebuild your financial strength very soon.
There are plenty of people drowned in financial crisis similar to yours. However, the hardships can always be overcome if you look into it positively.