Getting a loan to get out of debt can help you focus on paying one bill rather than several bills every month, save you time during your bill pay processes and potentially save you interest that accrues monthly to your current debt load. These loans will have a fixed end date with a fixed amount of monthly payments to help you remove the debt rather than paying infinite number of monthly payments on revolving debt such as credit cards or retail store credit accounts. Getting a getting out of debt loan requires picking a lender and applying for the loan.
List your Debts
Make a list of every creditor you owe not including your rent or mortgage payment, utility, Internet, cell phone or other living expenses. Write down how much you owe to each creditor. If you aren’t sure, call and ask. Write down a rough estimate of how much you owe next to the creditors you aren’t able to find balance information for. Add the amount owed. This is your current debt level and the ultimate amount of a loan you will try to receive.
Find a Lender
Pick a loan lender to work with. Start with your own banking institution to find out what debt consolidation options are available to you. The bank may provide you with mortgaging options and explain the benefits of this type of loan if you are homeowner. If your bank is unable to assist you, seek out other financial lenders such as those listed under “Financing” or “Loans” in the phone book or institutions you find in outdoor mini-strip malls in your community. Do not use “Pay Day” loan establishments.
Debt Consolidation Applications
Fill out any loan applications that are required of you. Each institution you apply with may check your credit to help determine your loan worthiness. Follow up on any face-to-face processes required by the institution to fund any money rewarded to you. Pay off as many of the creditors on your list as possible. If you are not able to secure a loan large enough to pay off all of the creditors, the institution granting you the loan can assist you in figuring out which creditors to pay off to give you the best financial edge possible.
Finding Old Debt
If you do not keep accurate records of whom you owe, start by going through your wallet or purse, writing down credit card you find. Find old collection notices and old statements belonging to companies not already on your list such as unpaid homeowner’s association dues, old court fees and fines, or outstanding amounts owed to banks for overdrawn checking accounts.
Guaranteed Interest Rates
No bank or finance institution can guarantee the exact interest rate you will be charged until you’ve completed the loan application process and an approval decision comes through. Your interest rate is determined by factors such as length of time in your residence, your job history and your credit scores.
Source: Aaron Larson,Getting a Debt Consolidation Loan, Expertlaw.com