Earlier this week I gave you some pros and cons of debt consolidation. Did you find these tips helpful? If you missed that article READ HERE.
Now since you know a bit more about debt consolidation, you may be asking yourself where should I go for the best debt consolidation loan? Before you start out on this journey blindly, it is important that you take some time to research and make sure you make the most educated choice.
Banks and Credit Unions – Avoid Them
Many consumers who are looking for debt consolidation loans that will accept their bad credit are advised to first contact a bank or credit union. Sure, it may make sense to do business with an institution you already trust but you may be disappointed to find out this is not your best choice and especially so if you have bad credit.
Banks and credit unions have a variety of loans, but normally, they do not cater to people with bad credit nor do a tremendous amount of debt consolidation agreements.
Banks and credit unions go by a risk-based pricing model. What this means is that if you are a big risk, your interest rate is going to be higher. So, even if you were to get approved for a loan, you could end up paying some very high interest rates. In other words, banks and credit unions aren’t really for those with bad credit.
Don’t worry, there are other lenders that can help you …
Debt Consolidation Lenders – That’s What You need
You need to find a good debt consolidation lender. These type of lenders are different from banks and credit unions. Why? Because they cater debt consolidation loans to those who have bad credit (they can also help those that have good credit).
When you apply for a debt consolidation loan with a lender, this means all of your monthly bills (credit card, loans, etc.) will be combined in one monthly payment – you will pay that monthly payment to the lender.
A reputable lender will always provide you with numerous options for the best debt consolidation loan that best fits your needs. Here is a Top 10 Review of the best debt consolidation loans of 2014.
So, all in all, while banks and credit unions offer debt consolidation loans for people with bad credit, you may want to avoid them and go straight for debt consolidation lenders. Share your thoughts below. Do you know anyone who has used debt consolidation?