Debt Consolidation: current news and updates
Debt consolidation is a way consumers might save money on interest and possibly get out of debt faster. Since you are rolling several payments into one, it will provide the convenience of one monthly payment.
News – Taking Charge
There are statistics out in the first month of 2010 that come from research firm TNS. These statistics state that 64 percent of consumers still feel bad when it comes to their personal finances and the economy. It also reports that 66 percent of consumers plan to reduce their personal spending in the next six months.
People are worried about losing their jobs, keeping their homes and paying higher taxes. Many are becoming proactive. They are dissecting what they spend their money on, researching the interest rates they’re paying, and trying to pay off their debt.
One of the ways they are doing this is by using debt consolidation loans. These loans can often give consumers a lower interest rate and help them get out of debt faster.
It will work like this:
- First Step: Consolidate your debt into a single manageable loan with a low fixed monthly payment.
- Second Step: Now you will have money left each month that is the difference between what you were paying on all the loans, versus the consolidated loan.
- Third Step: Take a little of that money and pay extra on your new, single loan payment. This will accelerate getting out of debt.
News – Federal Student Loan Consolidation
Student loans can’t be consolidated with your other loans. But there are options if you have several Federal Student Loans you might be better off with a consolidated loan.
One reason to do this is if you have variable interest rates on your federal education loans. The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The loan’s new rate will be based on the weighted average interest rate of the consolidated loans with the number rounded to the next one-eighth of one percent. The rate cannot exceed 8.25 percent.
For more information you can go to the federal student loan website at: http://www.ed.gov/about/offices/list/fsa/index.html.
Or check out: http://www.loanconsolidation.ed.gov/. This site will help you figure out if you should consider consolidating your student loans. There are calculators, and lots of information on how to do it and if you should.
Information – www.moneycentral.msn.com
This site has debt calculators that will help you run the numbers by time and payment, There is another calculator to help you figure your debt ratio. They have tips and tools to help you make unbiased decisions on the type and terms for a debt consolidation loan.
Information – Credit Report Management
Getting a debt consolidation loan and the percentage of that loan all comes down to the status of your credit report. At the very beginning of this process you need to request your credit report and verify that all your personal information, account information, balances and payment history is correct. If there are mistakes, get them fixed and cleared off. This process can take a good 30-45 days, so make sure you do this first.
Many sites offer free credit reports, and some even provide free FICA scores, but be careful. Sometimes these services are free for a short, limited number of days before they start charging you fees for their services. One of the websites that provides a free report and the ability to clear question some of the problems online is: www.annualcreditreport.com.
Information – Knowing What You Have
There are many sites out there that have a spreadsheet for you to fill out, or you can just write the information in a notebook. However you manage it, it is important to keep a list of what loans you have now and their specific details. You will need to know the balance due, the current interest rate and if it is a fixed rate or a flexible rate. Also note the payment amount and how many payments you have left to make. Having this information will help you utilize the other tools listed above.
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