How to Find the Right Low-Interest Debt Consolidation Loan

If you are having difficulty paying your monthly bills on time, a debt consolidation loan can be a godsend that helps you to lower your monthly payment by combining all of your high interest credit card debt into a single loan.

Beware of counselors or "debt management services" that may make promises they cannot keep just to get an application. Some of these services may charge higher interest rates than you are already paying in addition to charging a fee for services.

A debt management service can negotiate with each creditor on an individual basis for lower interest rates and to stop credit card fees from accruing. When a settlement has been reached, the interest rate will be a fixed rate. Provided the creditor is paid on time this rate will not increase. In the event of default resulting from late payment the creditor retains the right to resume collection proceedings.

In order to apply for a debt consolidation loan, you must first gather all of your bills (that really does mean all of them), as well as income statements. The amount of time the process will take depends on how you choose to apply.

Some applications may be completed on a company website, while other companies handle the application process over the phone. It is vitally important to ensure the company is reputable before revealing any of your personal information. Reviews of these programs and companies are available online and by contacting the Better Business Bureau or Chamber of Commerce in the city where the company operates. These will help in the decision in selecting the right company to handle the debts.

Companies may claim there are "no restrictions" on loan programs offered. Always read the fine print before making a final decision. Some companies also provide the option of borrowing more than the debt amount owed - often considerably more than what is owed. The additional funds are then combined with the debt amount to reach the total loan amount.

A word of caution when considering additional loan: The idea is to get rid of the debt and an addition to the loan could exacerbate an already bad situation. The loan consolidation counselor may advise you to take a larger loan than you really need. If you really do not need the extra money then turn it down.

Most reputable companies will have more than one plan to choose from, and by working with a loan consolidation counselor one on one and discussing your situation openly and honestly, you will no doubt find the right options for you. Don't ever forget that until you agree to their terms and commit to them, they are salespeople trying to win your business.