The concept is simple enough. If you have high-interest credit cards, you simply need to find a lender that offers unsecured debt consolidation loans and apply for one. Then you pay off all your credit cards and have one affordable monthly payment with a low-interest rate that will allow you to pay off all of your bills.
The major problem with this simple concept is that in our current economic environment, finding a lender that will extend an unsecured debt consolidation loan at a low rate is much easier said than done. In fact, it is pretty much impossible for someone that doesn’t have great credit and is already struggling with their current monthly payments. No lender wants to take on another lenders problems.
Resources For Unsecured Debt Consolidation Loans
If you have been turned down for several unsecured debt consolidation loans from traditional lenders you may want to look into peer to peer lending networks like Lending Club or Prosper. Since they are programs that connect potential borrowers directly to investors and essentially cut the bank out of the equation, it can often times be easier to get an approval. However, in order to qualify for a loan your credit score will need to be at least in the mid 600’s.
If your score is lower than 670, you will not likely get approved and if it isn’t higher than the mid 700’s than the rate on your loan is likely to be in the 12% to 15% range making your monthly payments likely higher than your current minimum monthly payments. This is due to the fact that the loan will only be amortized over a 3 to 5 year period which is considerably shorter than most credit cards.
The unfortunate reality is that unsecured debt consolidation loans are simply not going to be available to the consumers who need them the most. The good news, however, is that there is typically more than one path to a destination and if your initial path to debt freedom has been blocked, there are other options available that have not been.
One such option to look into is a debt settlement approach. Debt settlement does not involve getting an unsecured debt consolidation loan. By implementing a debt settlement strategy you will be attempting to negotiate down the principle balance of your debt with the creditors.
A debt settlement strategy is not appropriate for consumers in all situations. If you would like to explore how a debt settlement strategy may allow you to lower your monthly debt payments and get out of debt in only a few years, feel free to contact the Debt Settlement Professionals at Pacific Debt for a no obligation Debt Reduction Estimate.