Category: Debt Loan Consolidation

Debt remains the same all throughout loan

Layman’s terms describe a consolidation loan as a financial situation with the intention of taking out one loan to pay several other debts. Instead of having to pay multiple separate payments per month, a borrower can consolidate his cash into one payment. This is often done to secure a lower fixed interest rate over the course of the loan term.

Consolidation companies use the loan proceeds to pay off your existing debts, allowing you to pay one loan at a specific interest rate each month instead of trying to meet multiple obligations all month long. Often, consolidation offer better rates than many other types of consumer debts, meaning you can save money. However, there are disadvantages to securing a consolidation loan. While a borrower can still experience lower interest rates and payments due to the term being amortized over a longer period of time, the debt remains the same all throughout loan, with the main difference being that loan term has been extended.

Before taking on a debt consolidation loan, borrowers may want to consider using a debt consolidation calculator. These useful tools can help determine many factors for many financial situations, such as how long will it take to get out of debt, or how much interest can be saved if you get fixed interest rates. This can save you the time crunching up the numbers yourself and preventing unwelcome surprises in the future.

Platform that can reduce borrowing costs

Many small business owners are seeking debt consolidation and small business loan refinancing options, mistakenly believing that consolidation can save them money and fees. This highlights a troubling trend of many small business owners blindly entering into loan agreements with fixed interest payments and poor terms.

As a lender, QuarterSpot cautions all business owners to first research their current contract to understand the financial implications of a business loan refinancing. For those seeking a refinance of a fixed interest loan, QuarterSpot recommends that they continue to pay on their current debts for the duration of the term, and seek out a separate loan if they are in need of additional capital.

QuarterSpot provides business owners with a better source of funds through an automated underwriting platform that can reduce borrowing costs by as much as 85% when compared to traditional lenders. Further, QuarterSpot does not require small business owners to provide personal loan guarantees. Borrowers can apply for a loan in five minutes or less and receive funding in as little as 24 hours. QuarterSpot is committed to helping small business owners secure responsible small business loans that are clearly explained and fairly priced.

Consolidation deal is sometimes a marketing trick

There may be an upfront fee to pay or an administrative or arrangement fees for processing the refinancing. Some banks also charge early repayment fees, while others do not; so shop around for the best deal. Remember, that a debt consolidation deal is sometimes a marketing trick to attract extra attention for a standard personal loan.

And, there are other pitfalls to consider. You need to ensure the deal you are getting on your new financing is really better than the situation you were in before. Yes, you might have lower, more manageable repayments but your new loan consolidation provider may extend the term you repay that debt over a longer period. So while it gives you more money in the short term, you will pay much more in interest payments.

Also, check the rate. You need to ask the financial provider if it is a flat or reducing rate because there is a difference and personal loans can be advertised in both. While flat rates are usually lower; they might not be the most cost-effective option, whereas a reducing rate is calculated on the outstanding balance so compare like for like.

Make a smart decision about your debt relief

If your main goal right now is to get out of debt fast, that should not be your primary reason for choosing a solution. To make a smart decision about your debt relief program or debt loan consolidation, there are two important considerations that has very little to do with how fast you can pay off your debts.

Make sure you can afford the payments of the debt solution. First of all, you need to know your financial capabilities. This simply means you need to know what type of program can suit your payment abilities. There is a right debt solution as loan consolidation for every financial situation. If you have enough to pay for your basic needs and your debt payments at the same time, then a solution that provides a structured payment scheme should be enough for you.

Consider how the debt relief process will affect your credit history. Your financial goals are simply what you want to happen after you get rid of all your debts. Some people have not looked past their goals of getting out of debt. However, it is highly advised that you draft out even a generalized plan so that you can make a better choice. Most of the time, the issue here involves your credit score. Regardless of your financial goal, whether that is to buy a home, put up a business or even get a new job, you will find that your credit score will play a role in all of them.

Accelerate your payments as your income grows

The main and primary financial benefit of loan consolidation is simplified your payments. Rather than five, ten, or more payments every month, you have only one or two payments to make. Your options depend on many factors, including: whether your loans are federal or private (and you may have both), how much you earn, what assets you have, and whether you’re being contacted for collections.

In many cases, debt consolidation stretches the term of the loan, so you may actually pay more in interest over the life of the loan. If possible, try to accelerate your payments as your income grows to avoid paying additional interest. However, any discounts you receive for consolidating student loans will reduce the total interest you pay over the life of the loan.

Finally, student loan consolidation makes it easier to keep track of total annual interest paid. That figure is important if you are eligible for the student loan interest tax deduction. Although the deduction will not save you a lot of money, every little bit helps. It is hard to give any specific, helpful advice, without knowing more details about situation. A first step is trying to speak to creditors or debt loan consolidation lenders, in order to work out some kind of payment plan.