If you want to consolidate debt on your own, one of the obvious ways to do that is through debt consolidation loan. Sometimes, people do not really need professional help or debt reduction. All they need is a restructured payment plan that will make it easier for them to pay down their debts without supervision.
However, you have to be warned that not everyone who goes through debt consolidation loan is successful. There are many reasons to this and instead of identifying them, we will give you the solution instead. It all comes down to how you implement this debt relief program.
Debt consolidation loan goes through 3 distinct parts. The problem with some people is they skip some parts or pay less attention to the others. This is a mistake. You have to go through each part completely so make sure that you have all the bases covered in debt consolidation loan.
Part 1: Pre-debt consolidation loan preparations
The first part of the debt consolidation loan process happens just before you make the loan application. This is actually what most people skip or breeze through. They fail to analyze carefully if this debt solution is indeed the right way to solve their problems. If you make this mistake, it could be one of the reasons why you will fail in this debt relief program. So try not to skip through this step and take your time in considering your options.
Here are the three important steps in the first part of debt consolidation loan.
Analyze your debts. This analysis is not really to determine if your debt qualifies for this debt relief program. This is one of the debt solutions that can take on almost all types of credit accounts. However, you need to consider any prepayment penalties that some of your debts may have.
Make a budget and payment plan. Some people will only work on a budget or a payment plan. We suggest that you do both. The budget plan will help ensure that you have funds for the loan that you will make. The payment plan will identify the debts that you will pay off with the loan.
Do the math. The last step in this part is making the necessary calculations that will help you determine if your finances can really afford this debt relief program. If it turns out that you cannot, you may have to opt for a different debt solution – like those that will give you a debt reduction. This should be easy to do because there are debt consolidation calculators online – like those from Bankrate or Money.MSN.com.
Only when you have gone through these steps should you continue on to the next part of debt consolidation loan.
Part 2: Going through the loan application process
The second part is going through the whole loan application process. If part 1 convinces you that debt consolidation loan is the right debt solution, then you can proceed to the following steps.
Know the type of loan that you will borrow. Your goal in debt consolidation loan is to find a low interest loan that will replace the high interest ones that you owe. This means you need to know the different type of loans that you can get. You can opt for personal loans, secured loans or peer to peer lending. Make sure you end up with a loan that you qualify for and you have the best chances of paying off.
Look for the right lender. Even as you search for the right loan, you will notice that there are also several lending institutions that you need to choose from. When you know the loan that you will borrow, look for a lender that will give you the best debt consolidation loan rates and terms. You can call lenders or compare their rates online.
Find out the requirements. When you have the prospect lender, find out the requirements for the loan and prepare the documents. Complete the application form and submit it to the lender.
Be ready with the loan costs. When you get a loan, it usually comes with certain costs because the lender will incur them when they check your credit worthiness. All of these will have to be paid too.
Be careful when you make your selection. Make sure you select the loan from a lender that will give you the most ideal payment plan that will make it easier for you to pay down your debts. When you have accomplished these, only then can you proceed to part 3.
Part 3: Consolidating debts with the approved loan amount
The last part is also the phase in debt consolidation that some people do not take seriously. This is actually where most of the pitfalls of this debt solution happens. Ensure that you will follow everything that we will discuss in this part. It all begins when the loan is released to you by the lender.
Pay off your debts as planned. As soon as you get the loan amount, use it to pay off the debts indicated in your payment plan. This is important because holding on to the money for long will tempt you to use it on something else.
Create a payment plan for the one loan you will make. This plan will help you monitor when payments are made and the progress that you have accomplished. It is important to keep yourself from being late on payments so your credit score improves as you pay down your debts.
Stop accumulating debts. One of the downfalls of debt consolidation loan is the temptation to use the recently paid credit cards. Most of the time, people will think that their debts were not as bad as before and they end up falling back on their debt habits once more. Do not let this happen and keep a tight rein on your spending habits.
These are the processes involved in debt consolidation loan. Follow them strictly so you can achieve debt freedom through debt consolidation loan.
On a last note, we encourage you to use National Debt Relief’s Debt Consolidation Professional Plan to help you understand if your unique financial situation will benefit best from debt consolidation loan.