What you need to know before debt consolidation

When you are looking at the options that you have in consolidating all of your credit cards because of the debts that you piled on during the Christmas season there are six keys that banks always care about when trying to get you a loan that you can get and pay for and that the bank can offer. These six keys are:
Income - This is the income of you and your spouse combined. There is a certain amount of debt that the bank will allow you to carry and of course because of the high interest rates on credit cards you are over this percentage now, the bank does not like this and will try hard to get you back in line with your income using a lower percentage debt.
Loan Length - The longer the loan the lower the payments. Of course with a longer loan length the total interest paid will be higher but it is much easier to float in the kiddy pool then in the deep end of a dive tank. Don’t worry initially about how much interest you will need to pay.
Loan percentage - Interest rate percentages are higher and lower depending on your credit score. Try to make sure before you talk to a bank that all of your possible debt is in good shape so that the bank can offer you lower interest rates because they see you as a better credit risk.
Collateral - Do you have anything of value? Stocks, furniture, real estate, jewelry? This is important as the bank likes to see collateral guaranteeing a loan, this is why mortgages are such a low interest rate, the bank does not see much risk if they really had to sell your home for the money you owe
Co signing - If you have a rich relative that trusts you then you may be able to get them to cosign the load and the loan will then be in their name instead of yours for credit, this can help you get a loan as well as a lower interest rate. Although it is hard to ask someone to cosign a loan it may be your only way out of credit card debt.
Total debt servicing - Your total debt service ratio is the amount that you pat per month compared to your income. This is a very important ratio so if you can increase your income or somehow lower the interest rate for your debt you will be in better shape. Not only does the bank care about this but you will care too as this means that oyu will be living within your means instead of struggling from paycheck to paycheck.

Article Source: http://www.articles3.com

If you want to have a better lifestyle then I urge you to visit Family budgeting, a website where you can learn more about these things.

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