How to Consolidate Your Monthly Accounts into One Lower Monthly Payment

Last Update: March 10, 2020 Credit Cards Credit Report Debt Loans Save Money

There never seems to be enough money to go around!

If this is how you feel come month-end when the bills have to paid, perhaps it is time to consider a personal loan to consolidate your debt payments into one easy monthly payment, which might help you to actually save some money in the long run. Paying off credit card debt, or paying for unexpected expenses, or even being approved for a loan, may seem like an impossible task, especially if you have a not-so-perfect credit score.

However, many personal loan companies will approve loans for people with credit scores as low as 600 or 700. But whatever your score may be, it is always best to shop around for the best deals available to you.

When you re-finance high-interest debt with a personal loan, it can quickly cut down the amount of interest you are paying, which can allow you to pay it off in less time. Payday loans should be avoided, as it only helps in the moment, and perpetuates from month to month. You may never get out of a never-ending circle.

What Types of Personal Loans are Available?

Personal loans mainly come in two categories, secured loans, and unsecured loans. Both come with specific terms and conditions. An unsecured loan does not require any collateral, and you can borrow a specific amount of money at one time, and pay it back on a monthly basis.

A secured loan requires collateral such as your vehicle’s value, or other approved assets. You also can also borrow a specific amount, and pay it back usually on a monthly basis.

Details of general criteria of unsecured and secured personal loans.

  • Interest rates. Interest rates can vary between 9.5% and 13.5% Annual Percentage Rate (APR) Lower rates are usually applicable to secured loans.
  • Loan amount. Most personal loan companies require you to borrow at least $3,000. The maximum you will be able to borrow depends on your credit score, and other factors which apply to your credit worthiness, such as a debt-to-income ratio of less than 40%.
  • You must be able to verify employment and income.
  • Secured loan. Requires collateral.
  • Unsecured loan. Does not require collateral.

What is a Line of Credit?

You may want to make a few on-going purchases, instead of pay for one major project. A personal line of credit is reusable, and once you are approved, you can access any part of the line of credit, at any time. A personal line of credit is also available in a secured or unsecured form.

Most of the criteria is the same as that for the personal loans, except that you only pay interest on the amount you use, not on the lump sum as is the case in personal loans. Depending on your needs, this could be a good idea for you to pursue.

How Bad Credit Affect You?

If you have a bad credit record, and are struggling to secure a loan with your current credit score, there are options available to you. A number of lenders are offering online loans to folk with bad credit.

They are not always interested in reviewing your credit record, but are more concerned about whether you have employment and a steady income, and if you are able to repay the loan in the next few months. In some cases you may be required to provide some sort of collateral, such as equity in your motor vehicle. The danger here is that if you default with payments, you could lose your car.

You will have to apply online, and supply your personal details and bank information. Before you do this, make sure that you are dealing with a reputable company or lender.

The pros of a bad credit loan is that even with a bad credit record, you can qualify for a loan. It is also easy to get pre-approval.

The bad news is that interest rates are extremely high, there is often a limit to how much you can borrow. If you fail to pay this loan back, extra penalties and charges may apply. Remember that if you have offered some equity for the loan, you stand a chance to lose it if you default.

Why a Personal Loan May be a Good Idea in Some Situations?

  • To consolidate debt.
  • Unexpected medical bills.
  • Emergency car repairs.
  • Home repairs.
  • Purchase a motor vehicle.
  • College and education payments.
  • Purchase furniture or appliances.

These are just some of the things you can do with a personal loan to help you meet and cope with financial events, not always catered for in the budget.

Some possible scams.

When it comes to financial matters, there are fraudsters around who are out to make a fast buck at your expense. If you shop around for loan companies, it is up to you to make sure of the authenticity of any company you find on the net. Do the research and only deal with a company that has impeccable references, and proven legitimacy.

These companies usually have encrypted message systems so that your details are not paraded openly over the internet.

Here is a list of some things to look out for. Do not trust a lender who:

  • Tells you to declare your income higher than it is.
  • Tries to influence you into borrowing more money than you need.
  • Pressures you into accepting monthly repayments you are not sure you can meet.
  • Tells you it is not important to read the loan terms and conditions, as they are all the same.
  • May tell you a one-time loan is a line of credit.
  • Gives you a set of terms to sign which are different to the terms agreed on.
  • Asks you to sign blank forms to save time, saying the blanks will be filled in later.
  • States that you are not entitled to have copies of the documents you have signed.

Know your rights!

A personal loan will definitely be a boon to your financial situation, but do some research and find out exactly what your rights are. The federal government has legislation in place which bone fide loan companies have to adhere to.

Familiarize yourself with the legislation processes, so that you can be certain the company you have chosen to deal with, are sticking to the procedures.

Knowing that you are signing up with a legitimate loan company, will give you confidence and security when you are approved – and enjoy the benefits of your loan.



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