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Reaching closer to the credit limit of your credit card diminishes your credit score.

Consolidated debt loans are quite helpful in paying the excess loans they have acquired, because the interest rate charged on them is low as compared to Loans With No Credit Check When the person is not able to pay the Consolidated Debt Loan availed for paying the older consolidated loans on time, he is considered to ruin his credibility or lost his credibility, in the form of his credit score.

Higher interest rates on the loans would lead one getting over-burdened with bad debts, because it gets hard to pay loans with higher interest rates. When one is unable to pay the Consolidated Debt Loan, the credibility of a person decreases, and it is called as the ‘Consolidated Debt Loan with Bad Credit Loans

Further, to solve the problem of bad debts, some people attempt to make it easier by applying for a Consolidated Debt Loan. The reason behind getting a Consolidated Debt Loan is that the rate of interest, which is charged on this loan, is quite low as compared to the old loans. But, what would happen, if the same debt loan becomes a Bad Debt?
Because of the collateral asset, lenders offer secured personal loans at lower interest rates. The unique monetary facility is more popularly called bad credit car loans. In short, innumerable folks are suffering from low credit score. Conventional lenders refuse to give loans to these people for obvious reasons.

Reduce Credit Card Debt and Lower Your Monthly Payments With a Debt Consolidation Loan

Credit card debt can be a vicious cycle for anyone caught within it. The high interest monthly payments that come along with major credit cards make it very difficult to eliminate the original principle amount, causing those in debt to sink deeper and deeper, with little hope of ever escaping debt permanently. Fortunately, there is help available to those suffering from rising credit card bills, this help is called debt consolidation. Read on to learn if consolidation is the right choice for your credit card worries.

Millions of Americans are over their heads in credit card debt, and until recently the only escape for those Americans living paycheck to paycheck was to file bankruptcy and ruin their credit. Luckily, the debt consolidation market is growing, and with it more and more Americans are turning to a bill consolidation service for help.

Debt consolidation works by eliminating all of your high interest credit card bills, and replaces them with one lower monthly payment with a lower interest rate. Because of this lower interest rate, you will pay less every month, and have more money left over to start paying off your debts and avoid falling deeper into debt. The beauty of consolidation is the simplicity of it all, your life will be much less stressful with one predictable, and lower, monthly payment.

Credit card consolidation may be simple, but finding the right lender can be a bit more complicated. The market is booming and every lender is offering what they claim is the “best debt consolidation program”, but who really has the best? The answer, shop around. Just like shopping for anything else, the best way to find the best deal is to compare, compare, compare. The easiest way to do this is to request free online quotes from several lenders, and then compare their interest rates, terms, and success rates. Requesting free online consolidation quotes is also an excellent way to see if consolidating your bills is right for your personal financial needs, and see exactly how much debt consolidation will save you.

Where Can I Request Free Online Quotes?

There are hundreds of websites offering a free online debt consolidation quote to you. These sites will allow you to compare several major lenders side-by-side. Be sure to compare all aspects of your free online quotes, such as, the company’s reputation, success rate, loan terms, and interest rate.

Now that you are more familiar with how debt consolidation works and the importance of requesting free quotes, you probably want to see just how much you can save with a debt consolidation loan. A great place to learn more about debt consolidation, and get free quotes, is, an excellent online resource with lots of valuable information on debt consolidation.

Home Loans For Bad Credit Demystified

Bad credit can result due to a number of reasons – missed monthly payments, credit card bills, or rent. Though a bad credit will not affect the day to day life, it can prove to be a major obstacle when a loan is applied for – whether for a home, car, or personal loan. The good news is that home loans are now available even for people with a bad credit history.

Home loans for bad credit are also known as Sub prime loans or credit impaired loans. These loans usually carry higher rates of interest than their equivalent prime loans simply due to the fact that the lenders see the borrower as ‘high risk’. The rate of interest depends upon a number of factors, including the credit score, size of down payment, and the credit problems that the borrower has faced in the past.

The first thing the lender does is to check the borrower’s credit score. It is a smart idea for the borrower to request for his free credit reports to which he is entitled every year from each of the three major credit bureaus. The report will give him an idea of where he stands.

The next step consists of property appraisal of the current mortgaged home, if any, done by the lender to ensure that the value is enough to safeguard the loan in case the borrower is not able to repay the loan.

The down payment and monthly payments are based on the system of points and interest rates. A point is equal to 1 percent of the total home loan amount. Each lender offers different interest rates and points. A low interest rate with more points translates to a higher initial payment followed by low monthly payments. On the other hand a higher interest rate and fewer points mean a smaller immediate expenditure but higher monthly payments.

Advantages and Disadvantages

Apart from the most obvious advantage of getting the money for a home, sub-prime loans also lets the borrower use the money received to clear off previous debts and improve his credit report. The downside of bad credit loans is that it can lead a person already facing financial problems to further debt.

These loans also come with a pre-payment penalty which the borrower will have to pay in case he wishes to close the loan earlier. So any advantage from refinancing at a lower interest rate or selling the house would be lost.

Home loans for bad credit can be at times more confusing than prime loans. The borrower should make sure that he understands all the terms and conditions of the loan before taking it. It may be a good idea to seek professional services of a broker to help with the paperwork. Also, the borrower must remember to explore all his options and choose the loan which offers the best interest rate and repayment terms.

Option Loans Monthly Payment Scenarios

Option or minimum payment loans usually offer the borrower of a choice between several different payments. This option is usually available for the first five years of the loan.

An option payment loan usually comes with the option to make the following payments:

regular 30 year payment

interest only payment

minimum payment

A 30 year loan has the highest monthly payment. After this the interest only payment is second in size.

The smallest monthly payment is the minimum payment.

It is important to note that minimum payment rate can go as low as 1% (some lenders have rolled out 0.5% minimum payment rates).

Making the minimum payment can result in “negative amortization”. This is when any shortfall in payment less than the interest-only amount is added onto the principal of the loan. Many borrowers prefer having the lowest possible monthly payment, so they don’t mind this. Also, their equity in the property may rise faster than their loan size, so their equity still increases.

Minimum payments are typically fixed for each of the first five years. The minimum payment size usually increases once a year to a slightly higher level. Often times this is a 7.5% increase in the payment size. This is not a 7.5% increase in the interest rate – just a 7.5% increase in the size of the minimum payment. For example, if the minimum payment is $1,000 in the first year than in the second year the minimum payment is $1,075 ($1,000 * (1+7.5%)).

The following example shows how a $400,000 loan with a 1% minimum rate works:

Loan Amount 400,000

Minimum Payment Rate 1.00%

Loan Note Rate 7.25%

Loan Length (Years) 30

Loan Payment Options

Regular Monthly Payment 2,729

Interest Only Payment 2,417

Minimum Payment 1,287

Negative Amortization Per Month 1,130

Maximum Loan Size

Maximum negative amortization limit 115.00%

Maximum negative amortization loan size 460,000

Months of minimum payments till limit reached 53

Your Planning

Number of years you plan to keep the house 4

Loan balance if you make only minimum payments 454,245

Value of house when you sell 550,000

Projected loan to value ratio 83%

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