You come home from work, you check the mail. You find stacks upon stacks of bills. The utilities, your credit cards, your mortgage, your auto loans, even your student loans. Each one offers a minimum payment option, but even that is too much when you add them all together. To get your finances back under control and reduce your bills, you should look into loan consolidation.
Step 1:
Take inventory of your current bills, all of them, and don’t forget the ones that auto-draft or that you pay online! Write down your average monthly payment, your minimum required payment, your interest rate, and any other terms of the loan. It’s important to make sure that you have all of this information in one place when you get started so you can look for a debt consolidation loan that will be the best fit for you.
Step 2:
Start looking into debt consolidation loans. Once you’ve finished step 1, you know your total amount of debt. Your goal in a consolidation loan is to find a loan that will cover most or all of your total debt, thereby combining your bills into one payment each month! When you’re comparing offers, look at the available interest rates too. Your goal is to find a lower interest rate than the interest rates you’re already paying.
Step 3:
Find a loan consolidation calculator. Although the idea of getting all of your bills onto one statement may make you want to rush into things, you should make sure that it’s the best financial decision as well. With a loan consolidation calculator, you can compare your current bills, payments, and interest to what your bill, monthly payments, and interest rate would be with a consolidation loan.
Step 4:
Apply for the loan. Even if a loan consolidation agency reached out to you, you’ll have to be approved. If your debt has damaged your credit score, this will be the hardest step. Many debt consolidation agencies will work with you, but you may be required to put up collateral for a secured loan. Secured loans can be risky, but they increase the likelihood of approval.
Step 5:
Pay off your old debts with your new loan. Now you only have one bill to worry about. Your old debts are paid in full! Your brand new, carefully negotiated, single, monthly payment should be much easier to manage.
