5 Questions to Ask During a Debt Consolidation
One of the unique aspects of a debt consolidation loan is that all applicants have to go through debt counseling before being approved for a new loan. While this process is very useful for anyone who is trying to get in control of their personal finances, a lot of applicants are unsure of what to expect.
Debt counseling is a collaborative process. That means you and your counselor will work together to find a loan and develop a budget that will actually work for you. You will be encouraged to ask questions along the way. If you’re not sure what to ask, start with these suggestions.
What to Ask during a Debt Consolidation
- Does this budget include all of my monthly expenses? Putting aside money for the electric or phone bill is easy to remember, but does your budget include expenses such as groceries, your kids’ after school activities, or gas? Include everything you can think of for the best budget possible.
- How much should I save every month? A good budget will have you putting at least a small amount aside for savings to cover an unexpected bill or small emergency. Make sure you understand how much you need to save under your new spending plan.
- What should I do if I get extra income? If you work overtime or collect a tax refund check, you need to have a good plan for what to do with the money. Your counselor can tell you if it’s a better idea to use the money to pay off your debt consolidation loan faster, build up your personal savings, or both.
- Do I have any debts that aren’t included in the debt consolidation loan? Sometimes, people can’t or won’t want to include their student loans. Other bills, such as a mortgage may be too big to put in a consolidation loan. Make sure you know which loans you need to keep paying.
- What happens to my old loans? Depending on the exact wording of your debt consolidation loan, you might need to use the money to pay off your old debts, or the loan company might do it for you. Make sure that you understand which type of loan you have.