Need some advice on getting a consolidation loan
I am plan on getting a consolidation loan from my credit union to
consolidate and hopefully, eliminate all outstanding credit card debts. My
credit is good although I've had a couple of late payments here and there
(extenuating circumstances; moving, etc.) but nothing worse than that. My
question is: When I apply for a loan, is it "favorable" to include a
personal statement explaining my current situation and what I am trying to
accomplish? I want to explain to the loan officer that I intend to cut up
all my credit cards once the loan is approved so that there will be no
possibility of me procurring any more debts. Otherwise, I don't think they
will approve my loan due to my high income-to-debt ration
_If you're going to cut them up anyway, find yourself the nearest branch of
the Consumers Credit Counseling Service (CCCS). They're a not-for-profit
organization, and you don't pay them any fees other than for postage and
envelopes, a very small amount, and the amount you contract with them for
each month. They negotiate with your creditors to accept smaller
repayments and they collect the money from you in one lump sum every month,
then they mail the payments as agreed to the creditors. You WILL have to
cut up or surrender ALL your credit cards in the meantime; if they find out
you held even one back, they figure you're not serious about wanting to get
out of debt and the deal's off. Plus they have all kinds of free classes
on debt management, budgeting, living within your means and the like.
If you have too much debt to repay with one of their plans, they'll tell
you up front. Then I guess you'd be stuck with a consolidation loan, if
you can get one, or bankruptcy.
CCCS sounds to good to be true? (Because it's FREE). Well, thank the
United Way for funding them all these years. They're quite legit. Beware
of places offering you the same service with a similiar sounding name; if
they want $$$ up front before they will even talk to you, you're in the
wrong place.
_A consolidation loan is, in & of itself, a negative thing
to have on your credit record. This type of loan does NOT
"eliminate" all debt. Not at all. It combines them, so
that you have one bill coming each month from one company.
The interest rate is usually too high, & the payment is
often spread out over such a long period of time (such as
5 yrs) that you end up in a bigger mess than you were to
begin with.
It's just a suggestion, but have you considered other
approaches to reducing your debt? A consolidation loan
is usually the next to last resort before bankruptcy.
_While CCCS may be all that you
say it is, it is a station one step away from a bankruptcy. Taking
advantage of their service shows up on your credit record as a
"derogatory".
I can assure you that if somebody gets turned away from CCCS, nobody
in their right mind will give that person a consolidation loan. A
Credit Counselling service is where you go when you cannot re-organize
your debts with a consol. Absolutely. There are far too many scavengers and bottom feeders in
the business. It is often dificult to find out who the legitimate
people are, until it is too late. Your rule of "if they ask for money
up front, you're at the wrong address" is quite reliable. I would add
also: if they ask for "arranging fees" or "processing fees", you are
most likely about to get skinned, as well.
_The original poster is talking about an unsecured consol. & so am I.
In the US, getting this kind of consol. loan is usually the last
step a person takes before personal bankruptcy.
It is considered a sign that a person is a credit risk.
The reason it causes financial heartache is simple: "high
interest rates over as long as 5 years." What part of
this message do you fail to understand?