I have a lot of debt and I want to consolidate but no one will give me a loan to do so. What do I do?

Question

I have a lot of credit cards that I want to consolidate and get ride of but I keep getting denied or they give me very low loan amounts that will just get me in more trouble instead of helping me. I have a credit score between 650 and 700 and I make enough to pay it but I still can not get approved for a personal loan. I don't understand why I can get approved for a mortgage but not a personal loan. I am getting very frustrated and I don't know what to do. Can anyone help?

Answer 1

You could take out a home equity loan instead of a personal loan.

Answer 2

I don't know why you can't get a personal debt consolidation loan but, it might interest you to know that debt consolidation loans rarely keep people out of debt. You don't need to consolidate your debt, you just need to change your spending habits.

1). Put $1000 into a savings account.
2). Cut up your credit cards
3). Pay off your credit cards in order from smallest to largest, regardless of interest rate. I know that doesn't make mathematical sense, but if we were good at math, we would never have gotten so many credit cards to begin with and, once you start knocking out this debt, the interest won't be that big of a deal. Now, you pay minimums on everything except the card with the lowest balance. Once that card is paid off, you move to the next largest and so on. This is sometimes referred to as a "debt snowball" because once you pay off a card, you can apply that payment to the next and so on. Each time you pay off one of those cards, you get a little motivational boost which keeps you going.

The idea behind this and why it works is because you learn to change your spending habits by spending less than you make. The reason that debt consolidation loans don't work is that you don't change your spending habits. In fact, many people pay off credit cards with a debt consolidation loan only to open new credit cards 6 months down the road. Then you have the debt consolidation loan payment and a credit card payment.

This plan is designed to get you out of debt as urgently as possible which means you have to sacrifice along the way meaning no eating out, vacations, etc. The bottom line is that the less you spend on those things, the faster you will get out of debt and, like I said, you learn to live on less than you make. Imagine how much money you could save if you didn't have any credit card payments.

I would not recommend getting a mortgage until you are out of debt. When you do, you can have it manually underwritten which just means they look at things other than credit score to determine the likelihood of you making good on the loan.

Answer 3

Contact a Financial Credit Consultant. They can often times contact all your creditors and you make one payment through them.

Then, politely cut up all your credit cards as you only need one. Pay everything with cash. That way you know you will not spend what you don't have. The interest you pay on credit cards are just not worth it. The interest payments alone equal an annual vacation or a superb retirement.

Take the vacation and a rich retirement. Stay away from the credit card game. It's just silly.

Read THE S.O. GETTING RICH BOOK
http://www.lulu.com/content/468489

There's a weblink at the end of the book that offers great ways to pay off debts and retire rich. Plus the book is good too.

Answer 4

The difference between getting approved for a home loan is that they can take your house if you default, whereas a debt consolidation loan is often unsecured. However, there may be a company that would be willing to help you. Be sure to let them know you want to pay off your other debt at a lower interest rate. Try looking at www.whitepages.com - you can search for financial services on the business search, they have quite a few categories that might be able to help you.

If you are still unable to find somebody who will help you, this is what I'm doing....take your highest rate debt with the lowest balance (ex: $975 @ 25%) and pay extra on it until it is paid off. When you get that amount paid off, immediately begin applying the amount to your next highest rate, etc. This takes a couple months to see results, but works really good. I hope this helps you!

Here is an article on debt consolidation, something you may want to be aware of...

www.bankrate.com/brm/news/cc/20031007a1.asp

Answer 5

Personal loans are much riskier than a mortgage as they are unsecured so the credit rquirement are higher. If you don't pay your mortgage, they take your house. If you don't pay a personal loan, they have nothing to take.

As a general rule, you should not try a borrow your way out of debt. You should concentrate on getting the cards paid off one at time. First of all, stop using the cards! Prioritize the cards in order of interest rate and balance. Cards with higher interest rates and cards with very low balances should be dealt with first. Throw everything you can at these cards, even if it means paying the minimum on the other cards. Once one card is paid off, move on to the next one and do the same thing.

Answer 6

some economic advisers want to call issues like mortgages and scholar loans "stable debt" using fact they have a tendency to hold extremely low expenditures of interest and pay lower back their value over the years. regarding scholar loans, that's elementary to think of of them as making an investment on your destiny. The payback is in getting an coaching that maximum in all probability will qualify you for a much better paying job. this is a valid suggestions-set, yet you ought to additionally be life like. Debt is debt, and the greater debt you have, the greater careful a lender would be in qualifying you for a private loan. Their prevalent is many times that the whole debt funds, including very own loan and scholar loans, should not be greater suitable than approximately 35% of your gross earnings. So, sure, an excellent scholar very own loan would probably preclude you from paying for a house sooner or later. it unquestionably relies upon on how lots you're making, how enormous of a down charge you're able to make, how costly the home is, and how enormous your different debt funds are. scholar loans come into the equation as "different debt".

Answer 7

Opt for a debt consolidation loan: The easiest method of getting a debt consolidation loan is to utilize the equity of your home. Equity of your home is calculated and determined by the difference in the amount you have paid and the amount you owe. If the amount you have paid is more than the amount due, you can use it as collateral. This allows you to borrow money on lower interest rates. Besides, you also get tax benefit on this type of loan. Consult your tax advisor before opting for this loan.

Answer 8

In addition, you can
Take all your credit cards out of your wallet or purse, and leave them at home (though you may want to keep one for emergencies -- and, no, a really great sale or a cool new CD player does not qualify as an emergency).Cut up the cards if that's what it takes to stop using them.
Stop the flood of credit card offers. You can force credit bureaus to stop selling your name and address. Dial 1-888-5-OPTOUT to get the forms. If you're searching for a low interest card, don't wait for it to come to you. Visit a site like cardweb.com or bankrate.com to do your own research.

Always pay more than the minimum. The credit card companies are not just being nice when they require only a small minimum payment on your total balance. They calculate this minimum to extend your payments for as long as possible, to boost their profits. Scrimp if you need to, and pay as much as you can above the minimum every month.

Plan . Write down your balances for each card, and their interest rates. Generally, pay off the card with the highest rate first, and then the next highest, and so on. If you want a quick boost, go ahead and pay off a card with a low balance, just to have one paid-off card under your belt.

Ask for Reduced the interest rate. Most credit cards charge anywhere from 16% to 20%, which is huge! But you can negotiate with your credit card company for a lower rate. Particularly if you've had any of your cards for a while, take advantage of being a faithful customer, and call them up to demand a lower rate. Shoot for 11% or 12%. You'd be surprised at how easy it is.

consider combining your debts onto one or two of your lowest rate cards, if you've got some credit room on them. (If you're maxed out on those cards, then forget it.) Simply call your lender and ask how to transfer funds. Be wary of the higher interest rate they may charge.
If you're making payments well above the minimum, have reduced the interest rates on your cards, and have consolidated your debt, then you're in good shape with your credit card debt.

Answer 9

Instead of getting a loan to pay off a loan, you should try to pay off your credit cards. Credit card companies have set it up to where if you enroll in a debt management plan with a credit counselor, you can save on interest rate, pay one consolidated payment, and sometimes pay lower monthly rates. This can help you get on top of your debt.

Answer 10

With a mortgage or a car loan, there is collateral - something of value that they can seize to offset their potential loss, if you default. A personal loan is just that - them trusting in your ability and intent to pay them back. And since you have a lot of credit card debt, the reasonable lenders don't think you are a good risk to be able to pay them back. It's probably not that they doubt your word; they are just trying to look out for their own interests.

If you are holding a mortgage, have you tried to get an equity loan?

Answer 11

If you are making enough to pay the minimums then you have a chance as long as you have a little bit of money left over.

First, stop using the cards. It will do you no good to try to pay them off with you still charging on them. If you find yourself needing to charge on the cards then you need to seriously re-evaluate your budget. Most people can trim their budgets and find extra room. It is a matter of not buying certain things.

Next up, start your own payment plan. You pay the minimum on all but one of the cards. That one card you will pay extra to. The idea is to eliminate the debt on that card and then use the extra money plus whatever you were paying towards the minimum on that card towards the next card in your list.

Which card to choose? There are two ways. One is to choose the card with the highest interest rate. Paying that one off first will save you lots of money and following this method, you will be out of debt faster. The other way is to focus on the card with the smallest balance. The idea here that you will pay that off faster and get its money to use towards the other debts faster. Also, it is mental thing. Paying off that balance makes it feel like you are accomplishing something. With credit cards, I will bet that there are some with pretty high interest rates. Also, with universal default and other shady credit card traps, the longer you hold balances then the better the chance that a rate will go up or that a fee will be imposed. I would suggest you start paying the highest interest one first.

Another thing is to go thru your budget and find as many ways you can save as possible. One quick way to save money is to stop eating out. You can possibly save hundreds per month by doing that. Maybe less, depending on how often you eat out. Go thru what you spend in a month and figure out what you can do without for a while.

Also, see what you can sell. I know it hurts to get rid of stuff. Especially if you have to sell that stuff for way below what you paid for it. However, you need money and none of that stuff is making you money.

It sounds like you are doing pretty good since your credit score is not trashed. However, it also sounds like there is some concern here. You need to tackle the problem before it gets out of hand. Make some small sacrifices now and get the debt under control.