How Do You Get a Bill Consolidation Loan with
No Collateral?
by Larry Andrew
There are several
ways to get a bill consolidation loan with no collateral. However, let’s
discuss one of the most commonly used bill consolidation loans.
The most popular no collateral loan is referred
to as a credit card debt consolidation loan. What people generally do is
transfer as many debts as possible onto one credit card. It’s much easier
to keep track of one company and one payment than it is multiple companies.
There are several reasons this option is used.
First, there is no long process approval and mounds of paper work to go through.
This type loan does not require that you put up
collateral. |
In addition, many major
credit card companies offer very favorable terms for consolidating all your
bills onto their credit card. They offer two compelling reasons:
1. They offer you several months of payments
with no interest. You should be able to get a twelve-month no interest option.
2. They normally offer you a much lower interest
rate at the end of the twelve-month grace period. This is usually much lower
than your current interest rate.
This is very attractive for many people that
have no collateral for a loan. However, there are some very definite drawbacks.
Be sure to read the fine print of the agreement. There are usually three
potential problems:
1. If you fail to make a payment on time, the
grace period may immediately end. However, that’s not all. You will
more than likely be given a higher interest rate than you would get at the
end of the twelve-month period. Therefore, you could be worse off than you
were before you started the consolidation loan.
2. If the credit card payment does not process
correctly, your payment will be considered late. The same penalties described
above are applicable.
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Note: It is very important
that your write down and document every payment you make. Write down the
day you paid, the amount you paid and the check number you used. If any problems
occur, you can have the facts and figures available to dispute the late payment.
As a side note, consider using an online payment
option. Online payments can be used to automatically pay your bill on a specific
date. They also track what was paid and when.
3. If you go over your credit card limit, there
will be problems. They range from penalties and extra fees to termination
of your grace period.
If you decide to use a credit card bill
consolidation loan with no collateral, be sure to make your payments on time.
Ideally, you should pay as much as you can each month. This can significantly
reduce your debt over the twelve-month period because all of your payment
is for your debt with no interest charge. Also, don’t make any additional
charges on your credit card. You want to reduce your debt, not increase it.
Now that you know some pros and cons for getting
a bill consolidation loan with no collateral, do your homework. It would
probably be wise to talk with a debt management counselor to get an outside
objective opinion.
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About the Author
Larry Andrew, American Fork, UT, USA
Andrew_and_Associates@yahoo.com
More Details about Bill Consolidation Loan here.
Larry Andrew founded and operated his own educational consulting corporation
for over twenty years. He has extensive experience in teaching, software,
business and finance.
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