Debt Consolidation Loans: Get Away with the Damaging Consequences of Bad Credit

Kristin

Just how dangerous bad credit is to your finances? Let us take a look on the following instances and see the extent of damage it could cost to your stable financial status.

Supposedly you want to buy a brand new car to replace your old family sedan. You found out that purchasing the car in an installment basis would be quite expensive compared to cashing it out to the car dealer. However, you do not have enough cash savings to buy out your preferred vehicle. Thus, you decided to secure an auto loan to finance the purchase of your new car.

Unfortunately, your auto loan application is turned down by the lending institution, citing the bad credit rating you have obtained from the previous calendar year.

Suddenly, you remembered that you have not yet finished repaying your mortgage and worse, you have committed defaults on your monthly payments. The report also showed your credit card accounts, which are also unsettled prior to your auto loan application. Other lines of credit are also recorded to your credit report, and most of these showed delinquency in monthly payments. That is when you realized that all of these have done serious damage to your present financial status.

You have several attempts on taking out new auto loan to finance the purchase of your new car, but unfortunately most auto loan providers rejected your loan application. On the other hand, lenders who have reconsidered your loan application gave you a list of options, which, unfortunately, charges you a higher interest rate.

At this point, your brand new car will just be a dream to think about. Forget a brand new Porsche or Beemer and drive your old family sedan once again.

Possessing bad credit does not extend the damage on auto applications alone. Try to take out a second mortgage and your mortgage lender will take the exact course of action done by the auto loan provider. You cannot increase your credit card accounts unless you have settled your financial obligations with your existing creditors. You will also experience difficulties in taking out other types of loans as long as you have that bad credit posted in your annual credit report.

Fortunately, you can still repair your bad credit report through securing a bad credit debt consolidation loan. This type of loan will help you prevent your credit status as well as your present financial condition from further deterioration. It would be the substitute for all of your unsettled financial obligations. The consolidated loan would be used as the repayment for your entire unsettled financial obligation to other creditors. Since consolidated loan is not immediately repayable, you have enough time to prepare for the repayment.

However, expect that you will be charged a slightly higher interest rate if you will get a bad credit debt consolidation loan, considering the fact that you are still a credit risk for the debt consolidator. The good thing here is that the interest payment on a bad credit debt consolidation loan is still lower compared to the individual interest payment of your existing lines of credit. Thus, consolidating all of your existing debts is still the best option for improving your current bad credit status instead of dealing with each debt individually.

Do not let the damaging consequences of bad credit deter your stable financial status. Secure a bad credit debt consolidation loan and free yourself of credit-related worries later on.

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