If you have a lot of outstanding debt making ends meet each month is often difficult. Many people turn to debt consolidation loans to help them roll all of their debt into one monthly payment.
This tends to lower the out-of-pocket expense you have each month, freeing up a good amount of money. However, if you have less-than-perfect credit, obtaining a debt consolidation loan isn’t always easy. But, there are lenders that specialize in personal bad credit loans that can help you.
Determining the Amount You Need to Borrow
When applying for bad credit loans lenders take into consideration the amount of money you make, your length of employment and your credit rating to determine your eligibility. Since most bad credit lenders will tell you how much money you’re allowed to borrow, it’s important to know how much money you need before you even apply.
To determine the amount of money you need, combine the total amount you owe on all of your monthly bills. The goal is to use the personal bad credit loan to pay off your outstanding debt, so you want to make sure you include everything. Don’t be discouraged if you can’t borrow the full amount, use the money to pay off the smaller bills first, so you have the least amount of monthly payments possible.
Determining Your Eligibility for a Bad Credit Loan
A lot of people are afraid to apply for bad credit loans, because they fear the lenders will turn them down. While it’s possible, keep in mind that lenders who offer loans to people with less-than-perfect credit, specialize in this type of lending. Don’t be surprised if you have to give the lender something for collateral.
It’s common for the bank lending money to you to put a lien on your home or car until the loan is paid off. If you have a decent employment history and can prove that your habits of untimely payments are in the past, qualifying for a loan shouldn’t be an issue with the right lender.
Paying Off Your Debt with a Bad Credit Loan
Once you get approved for the loan, you need to begin paying off the money that you owe. However, you may not be required to pay the entire balance. Instead of simply writing checks and mailing them to the companies, call them.
Tell the creditor that you want to pay off the amount in full and ask them if they are willing to settle the amount for less than the amount owed. Sometimes the creditor is willing to take a lessor amount to avoid writing off the money altogether. If you negotiate well, you could end up with all your debt consolidated and some cash left over.