#The best loan companies for bad credit #The #best #loan #companies #for #bad #credit

The best loan companies for bad credit

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5 Best Debt Consolidation Loans for Bad Credit (Rates & Reviews)

A few weeks ago, while in line at the grocery store, I glimpsed a woman whose wallet held more credit cards than I’ve ever seen in one place. Her straining pocketbook held the financial equivalent of a Baskin Robbins — it looked like she had an entire 31-flavor buffet of credit cards.

Though this woman may be an extreme example, most of us do tend to have a variety of credit lines at any given time — usually a combination of installment loans (mortgages, student loans, auto loans, etc.) and credit cards. In many cases, having multiple credit accounts in good standing can improve your score — but, when you fall behind on one type of debt, it can strain your ability to keep up with the rest.

For some, a good way to get a handle on their debt is to get it all in one place through a debt consolidation loan. Keep reading to learn more about debt consolidation, or skip ahead to find reviews of our top companies.

What is a Debt Consolidation Loan and How Does it Work?

In a sentence, debt consolidation is the process of taking out one large loan to pay off multiple, smaller loans. The key idea is to combine — or consolidate — several loans with different terms into one loan, hopefully with more favorable terms.

For example, let’s look at our hypothetical friend, Pete. Our friend Pete has a total of $10,000 of debt, spread across four accounts, like so:

Not only does each of Pete’s debts have a different lender, but they all have different interest rates — some of them quite high. So, Pete is currently paying four different people, at four different times, with four different interest rates.

In an ideal consolidation world, Pete would be able to pay off all four of his loans with a single, larger loan that averages out to a lower interest rate than his current debts carry. Not only would he be able to simplify his payments, but he’d lower them, as well.

At the very least, Pete could lower his monthly payments by getting a new loan with a longer term length — up to 30 years in some cases. While this will mean he’ll pay more interest in the long run, it may help him better manage his payments in the short term, helping to prevent missed payments or even default.

Credit Card & Other Unsecured Debt Consolidation

Credit cards and other high-interest unsecured debt (debt not backed by collateral) are the main reasons many people consider debt consolidation. A large number of credit cards can carry interest rates in the high double-digits; rates of 20% to 25% (or even more) are especially common in the subprime markets.

Those high interest rates come with high monthly payments, and it can be easy to get caught in the “minimum payment” cycle — which only leads to an ever-growing balance. Paying off your credit cards with a consolidation loan can help you avoid that cycle, as well as any credit score hits from missing payments when the balance becomes unmanageable. Be sure to look for an interest rate lower than that of your current debts.

Student Loan Debt Consolidation

Student loan consolidation can be a big help to recent graduates struggling to pay multiple student loans after leaving school. It can be a good way to simplify the payments — a new student loan for every year or semester can mean a number of different hands in your pocketbook — as well as potentially trade a variable interest rate for a fixed one.

The thing to know about student loan consolidation is that not all student loans can be consolidated. While most federal student loans can be consolidated, private education loans are not eligible. You also won’t be eligible for consolidation if you are already in default on your student loans.

Top 5 Debt Consolidation Loan Companies

Choosing the best company for your debt consolidation loan will be mostly a matter of research. You’ll want to comparison shop loan terms, as well as check out the reputation of the providers, before entering an agreement. Of course, the best place to start is by reading the expert reviews on our top companies below.

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SOURCE: http://www.badcredit.org/best-debt-consolidation-loans/

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