Debt Consolidation Programs — A Convenient Way to Pay Off Multiple Loans
When you get more loans than you can bear, you would have hard time making the payments. This is where a debt consolidation program comes to play a big role. But, before you opt for the programs, learn how they work and make sure whether you really need them.
Debt Consolidation Program
A debt consolidation program is a type of service that combines multiple loans into a single payment. It can be said that it is a program which is offered by credit counseling organizations. You are supposed to make a single payment to the company and the company will forward your payments to creditors. It’s a brand new way to pay off your loans.
Below are key highlights of the debt consolidation programs.
· You need to make a single payment not the multiple ones
· You may pay lower on a monthly basis than you had before
· It may not take longer to pay off your debt
· Though, you spend on interests, you will hopefully get a lower interest rate
· The aim is to simplify or lower interest rates.
Counseling: Start the process with counseling. Speak to staff of the company that provides debt consolidation programs and determine whether or not they are helpful to lay out a plan. During the counseling, you can get in-depth information about the debt like such know about fees, and how the organization works.
Paying fees: No matter you have selected a nonprofit organization; you will need to pay a setup fee and monthly fees. Before making any choice, it is advisable to compare fees of many organizations.
Unsecured loans: Remember, you can apply for debt consolidation programs for unsecured debt only. Unsecured debts comprise of loans like personal loans, credit cards, and some student loans.
Keep your accounts: Even if you have debt consolidation program, your loans will continue to exist. You will not get a new loan or move the debt around. You’ll require making a single monthly payment only to your service provider. Then the service provider will distribute the funds to your different creditors. It is the responsibility of the service provider to communicate with your creditors during the setup process.
No new debt: The aim of the program is to end your debt. You will require for closing most of your credit cards. You will need to agree that you would not take new loans while you’re paying off the old loans.
To sum up, a debt consolidation program is really a convenient way to pay off several loans. There are many companies that deal in this service. So if you are reeling under several debts, look out for a reputable agency and be a part of debt consolidation program to get rid of a paying interests for multiple loans.