I hate to be the bearer of bad news but a bad credit debt consolidation loan is not the answer to your debt problems.
For two reasons...
1. If you already have bad credit you face three challenges.
a) getting the loan in the first place
b) getting a big enough loan to meet your needs, and
c) getting the loan at an interest rate that actually saves you money and helps you pay down your debts faster.
2. Debt consolidation loans, whether you have bad credit or good credit, are usually not effective in getting people out of debt unless they make other, more important changes in their life and financial habits.
My guess is that I'm probably not telling you something that deep down in your heart you don't already know.
But take 'heart'...
I'll touch on this later.
WARNING: I want to start by making it very clear that I DO NOT recommend short term bad credit loans as a method of debt consolidation or debt relief. There are much better options available to you. To learn more about these options I recommend that you find an independent debt counselor that can evaluate your situation, help you prepare a debt plan, and recommend the appropriate debt relief option. You can either meet with a counselor in person where you live, or, if it is more convenient, you can discuss your situation over the telephone. The debt counselors that I recommend offer a free initial telephone consultation after which you will have a debt reduction plan in place as well as an estimate of your potential savings. If you wish, you can contact them here.
NOW... I know that many people will nonetheless ignore this warning and continue their search for such loans. Therefore, I want to make sure that you at least get the best loan, at the best rate to suit your needs. The solution? Deal with one loan broker who works with over 70 lenders to get instantly approved and the best deal.
a) You can apply online...
b) You can get instantly approved...
c) Your cash is deposited overnight into your bank account.
Talk to an independent senior debt counselor today (for free) and receive a personalized debt reduction plan.
Alright, let's have a closer look at the reasons why a new bad credit loan is not the answer to your debt problems, help you avoid the bad credit debt consolidation loan scams that are out there, and more importantly, discuss some bad credit debt relief options that actually may work for you and get you on the path to debt freedom.
"I" don't know.
No, really. Do you know exactly why you have bad credit? If you don't, then this should be the first thing that you investigate. Were you late on your debt payments? Have you missed debt payments completely? Are you facing a hardship in your life like divorce, job loss or an unexpected illness that has lead to events that have affected your credit score/report? You need to understand the reasons intimately before you can decide on a debt relief plan of attack. (And you certainly need to know this before you consider a bad credit debt consolidation loan.) I'll touch on this more in the next section. For now let's look at the challenges of consolidating your debts with a new loan when you have bad credit.
Challenge #1: You have bad credit. You are already in significant debt. In other words, any lender will likely look at you as high risk. Sorry, but that is the truth. The fact is, you are going to have a difficult time just finding a debt consolidation lender who will work with you. (But take heart, this may be a blessing in disguise. In fact I know it is. Keep reading.)
Challenge #2: If you are looking to get
consolidation loan, chances are you have a significant amount of
(If you only have a small amount of debt then my advice to you
right now is to forget about consolidating your debts altogether. It
won't be worth it.) But if you do have significant outstanding debts,
and bad credit, your chances
of securing a big enough loan to pay off your existing debts is
slim to none. (Remember however, that even if you did get the loan, you
are not reducing your overall debt obligations by merely shifting your
debts from one creditor to another.)
Challenge #3: Let's say that you do find a lender who will not only lend you the money, but lend you a large enough sum to consolidate all of your existing unsecured debts. Now you're in business! But wait, they will want to be compensated for extending a large, unsecured loan to someone with bad credit won't they? And that compensation will come in the form of the "risk" portion of the interest rate they will charge you. In plain English that means...
The whole premise of a debt consolidation loan is to shift debts with high interest rates into a new loan with lower interest rates and usually lower monthly payments. So if you had good credit and can secure a new loan with a significantly lower interest rate and better terms, then yes, under certain circumstances this makes sense. But even in this "perfect" scenario, there are many pitfalls. In fact, before anyone considers borrowing money to "shift" debts I recommend that they "prove" that they can handle it. Not prove to a lender, but prove it to themselves.
It should be no surprise that there are a number of "scams" out there when it comes to this type of loan. The most prevalent of these involves getting unsuspecting people to pay up front fees in order to "process" their application. Of course, in most instances the application is denied and the scam artists keep your money. There are other debt consolidation scams as well. You can read more about them here.
You cannot borrow your way out of debt. And taking on even more credit, when you are already up to your eyeballs in debt can be (and usually is) a true disaster in the making. A very high percentage of people who take on more credit to shift existing debts, end up in even more debt within a short period of time.
Because they haven't dealt with the real money problems in their lives. They slapped on the "debt consolidation loan bandage" thinking it would stop the bleeding, rather than making the hard decisions and implementing the life changing actions they needed to. Actions that would help them to get out of debt, and not simply shift their debt, which is all that a bad credit debt consolidation loan will accomplish. So don't worry if you cannot get a debt loan because of your poor credit. There are much better options available to you.