Can I do Debt consolidation Loan on my own?
While researching debt consolidation, some people begin to wonder if this is something that they can do without going through a bank. After all, debt consolidation is simply replacing a lot of credit cards with one loan. Why not look for a loan on your own?
What to know prior to a Debt Consolidation Loan
The truth is that for people with very small debt loads, finding your own debt consolidation loan might be a good option. This is more commonly referred to as a balance transfer; you will find a credit card with a lower interest rate than your current card and simply transfer the balance on your old cards to your new one.
The problem with this is that a glance transfer typically costs between 3 and 5 percent of the total loan balance. This starts to become a significant amount when a person owes thousands of dollars. People who owe a lot of money will also discover that it can be next to impossible to find a credit card with a high enough credit limit to transfer all of the balances from several different credit cards.
For many people, debt consolidation through a professional company is a simpler and cheaper option. Since the credit cards are paid off, not simply transferred to a new card, there are no fees involved like there are with a balance transfer. Furthermore, larger loans are available. It’s very common to find a loan for $10,000 or more, and there are loans of $100,000 or more available.
Because all applicants for a debt consolidation loan have to got through debt counseling, banks are much more likely to view candidates for debt consolidation loans as a better credit risk than candidates for other types of loans. This means that many people find a debt consolidation loan with an interest rate that is a lot lower than what they would have found on their own.
Finally, debt consolidation with a professional company means that another person is dealing with the hassles of getting your old loans paid off and finding a new loan with terms that will save you money. You are much more likely to find a loan with a lower monthly payment and a lower interest rate than what you would find by searching on your own.