You can use bad credit loans for just about any purpose you can think of, but one of their more useful applications for people in a credit crisis is their use as debt consolidation loans. When you use these products in this way, you can potentially give yourself a whole new handle on your credit problems. You have to do this carefully, though, and it may not be suitable for everyone who would like to try it. Find out if you could benefit from this possible solution by reading the article below.
Identifying the Issue
Debt consolidation loans are not for everyone. It should be obvious that borrowing more money will not be the solution to all the problems you could possibly have with debt, so it’s important to make sure that your specific debt issue is one that can be solved with this type of intervention. Generally, debt that is best suited to being handled with bad credit loans:
- is significant in size, measuring at least several hundred if not several thousand dollars (not too big, though! Mortgage-sized debts are too large for these products to be an elegant solution).
- has a long-lasting legacy with you – it’s been around for a while and it’s really starting to weigh you down financially.
- has a very high interest rate attached that there is a lot of room to bring down.
- is spread out across multiple different products or lenders (in other words, this generally won’t work if your debt is all in one place).
If your debt meets all of these criteria, it’s possible that these loans can help you to sort at least some of these issues out. It’s hard to say for certain because there are many variables that might apply to individual cases, and these can have a great effect on whether or not using loans like this is an economically viable solution for you. Still, if all the indicators are in your favour like this, you should take that as a sign that it is worth your while to investigate further and see what kind of loan offers you can get. Once you know where you stand in terms of what you can command on the market, you’ll have a better idea of how to go about securing the type of loan you need to put your plan into action.
How To Solve Your Debt Problem
Even though they may not always be meant specifically for such a purpose, you can use bad credit loans as debt consolidation loans. To do this, you’ll want to apply for a regular loan as usual, then use the money you get from that loan to pay off your other debts in full (this won’t work if you only go by half-measures). Doing this allows you to collect up all of your debt into one place and to only have to keep track of one single source of debt going forward. This minimizes your chances of making errors during your repayment process and keeps things easy for you to understand and keep control of. You’ll still need to make the payments you normally would and worry about timing and all of the other small considerations that would crop up if you had left all your existing loans out there as they were, but at least you won’t be doing it for several different debts all at once anymore. With any luck, this will make it much easier for you to get on top of what you owe and pay it back once and for all.
It’s important to pay attention to the interest rate on your new loan when you do this, since you do not want to end up with a debt burden that actually costs you more than what you started with. You also want to make sure that your repayment period is long enough to give you some room for error with your monthly payments – that is to say, you shouldn’t be paying so much each month that you don’t have room for any other expenses in your budget. That kind of tight financial leash is very stressful to keep up and can easily go awry if anything unexpected happens to disrupt your income or your planned expenses. For this reason, it’s best to aim for a monthly payment size that is slightly less than what you could pay if you poured everything into this effort, and then simply add that extra money into your payment for the month when you can. Your debt will fall faster and you still won’t have to deal with the troubling aspects of committing to that rushed schedule.
While this process is very common and not at all something to be worried about, some people will still find going through it to be an intimidating prospect. For those people, there is some outside help available that it may be worth your time to seek out. Some lenders specialize in offering bad credit loans that will be used for debt consolidation purposes, and for that reason, they also offer extensive help in setting up the payments on your old debts and making sure all of your affairs are resolved. Some will even take the reins for you and handle all of the setup work themselves, leaving you with only your repayment obligations to worry about. You don’t necessarily need this aid in order to use this strategy to your advantage, but it does help, especially if you’ve never done it before and have been under a lot of stress trying to keep things under control. You want to make sure that everything is done right the first time so you don’t end up owing more money or having to sort out another problem a few months down the line, so if you’re at all lacking in confidence about your ability to do this on your own, consider consulting with one of those specialty lenders. It’s a safer option to help make sure everything goes well for you, even if you may have to pay a little bit more interest to do it.
Debt consolidation using bad credit loans can be a great move toward a better financial future, but only if you know why you’re doing it and what reasonable progress looks like in this context. If you’re going to go down this road, it’s important to understand exactly what that means and have your expectations in order as you go. Debt consolidation is not a magic solution to severe and persistent debt problems. It is a strategy intended to help you mitigate the damage you have already done, but it will not wipe away that damage, and nor will it help you to avoid making the same mistakes in the future that put you into this mess. Once you get one, you could easily go right back to spending beyond your means and have to start this whole process over again with a new set of debts in as little as a few months. This, obviously, will completely negate the progress you made by choosing to use the debt consolidation loan in the first place.
If you don’t want to end up right back at square one once you’ve dealt with your existing debts, it’s important to pair a debt consolidation loan with other credit recovery strategies, including credit rebuilding efforts and potentially counselling to reduce your dependence on borrowed money. There is no point in being proactive about this problem if you are not willing to do everything it takes to correct your course and put yourself on a better track in the future. Resolve the immediate problem that the debt poses, but then take a closer look at what got you into that position in the first place and work on doing better in that area too; it’s the only way to make sure that all your efforts were not in vain.
Ready to Consolidate? Let the Bad Credit Loans Come To You
Once you’ve made the decision to try to move forward with consolidating your debt, you’ll still need to find yourself some actual bad credit loans to apply for. Luckily, that won’t be any trouble at all if you allow Bonsai Finance to assist you. Because of our years of service to prospective borrowers such as yourself, we’ve learned exactly what information is most pertinent to you, and that’s what we display on our handy online loan search tool. Using it will allow you to learn everything you want to know about the loans you might take on, all at a glance. If you want to look into a particular prospect further, we have many articles available on all our partner lenders. There’s no need to guess at which loan is best to help you with your debt troubles – with our help, you’ll know for certain.