I recently purchased a home (3 months ago) and financed 100% of the home. At this point I do not have an equity in the home. I am currently looking for a way to consolidate some of my debt to lower my rate, lower my payment, and ultimately pay off the debt sooner. I have 1 car loan, 1 personal loan, and 5 credit/store cards that I would like to consolidate totaling about $16,600. My FICO score is currently 686, and I am on time every month with all of my bills. I have paid all bills on time (most of the time more than the minimum) for more than 3 years straight. My problem is that my Debt to Income ratio is probably too high for most lenders to consider me for a consolidation loan. What can I do to consolidate ALL of my debt? Any feedback would be appreciated.
2007-09-21 03:57:46 · 7 answers · asked by j_A 2 in Business & Finance ➔ Personal Finance
Debt consolidation loans are usually a rip-off, extending loans way out and you end up paying a lot more in interest, plus the loan origination fees increase the amount owed.
Instead:
Transfer credit card debt to lower interest rate cards, some will give you 0% for a transfer. Do this before deciding which one has the highest interest rate to pay off first.
Pay at least double the minimum monthly payment on the credit cards and car loan. This extra will go entirely towards the principal, and reduce the debt a lot faster.
Pay off the highest interest rate credit card (or loan) first.
It is also a good idea to pay extra principal on your house, to reduce the interest and increase the equity.
Sell the car and get a used one that costs less if you have to.
Destroy your credit cards and don't use them again, instead get a credit/debit card that pays interest and cash back for any charges. So you make money when using it instead of pay money.
2007-09-21 04:14:23 · answer #1 · answered by Feeling Mutual 7 · 2⤊ 0⤋
People get into trouble by consolidating all the debts, then running the credit cards right back up. Instead of shifting your debt to a new loan, work on paying off those debts.
Start with the credit cards. Put every penny you can squeeze out of your budget on the highest interest rate credit card, while making minimum payments on all your other bills. When the highest interest rate card is paid off, move to the next one till they are all paid off.
Next, pay off the personal loan, then the car loan.
It will take you 2 or 3 years but if you really work at it you'll be debt free and have a good payment history.
2007-09-21 04:34:15 · answer #2 · answered by bdancer222 7 · 1⤊ 0⤋
Practically any type of loan can be wrapped into the debt consolidation process. Common types include finance charges, late fees and overdraft charges, credit cards, personal loans, utility bills, medical bills, car loans, store cards, gas cards and back taxes. A debt consolidation loanold loans are replaced with a new one that has more favorable terms. Your loan consultant will negotiate with creditors on your behalf, so you’ll no longer have to deal with harassing phone calls and daily mail.
2007-09-21 05:09:10 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Without sitting down with you and your family, I would recemmend a program called debt stacking. It goes like this:
Far left column- names of all creditors, be sure they are listed in order of highest interest to lowest interest. We are interested here in paying as little interest as possible.
Next column to right- Interest rate of all creditors listed to the left.
Next column to right- Total amount owed for all creditors.
Next column- minimum payment for each.
Last column- payment you make for each.
Look at all the payments made for the second highest to last, find out how much in overpayments you make. Add this up, then take that amount and add it to what you pay on the highest interest. When that is paid off, roll that entire payment down onto the second, and so on. It takes a couple years to do, but it will help build up your FICO score at the same time you are paying as little as possible in interest.
2007-09-21 05:23:21 · answer #4 · answered by Mark S 6 · 0⤊ 0⤋
Hi,
Check out http://financeguru.consumerspot.info for some useful info and tips on debt consolidation. Good luck!
2007-09-21 04:10:05 · answer #5 · answered by Anonymous · 0⤊ 1⤋
Payday loans in lots of situations have an extremely extreme activity fee, and is barely useful in case you like it desperately for an extremely short quantity of time, and are confident which you would be able to pay the activity fee on the inner maximum loan
2016-10-09 14:29:03 · answer #6 · answered by ? 4 · 0⤊ 0⤋
Hi,
I used "Credit Solution" to settle my debt.They managed to reduce my debt 58%.It's legitimate.I came accross this company on NBC News Special Edition.Check it out here:
http://creditsolution.easyurl.net
2007-09-22 05:14:03 · answer #7 · answered by Jenifer 1 · 0⤊ 0⤋