Will A Debt Consolidation Agency Leave You With A Huge Debt Ratio?
Author: Hector Milla
Your debt ratio is a measure of how much debt you have, compared to the amount of income you have. The higher your debt to income ratio is, the less likely it is that you will qualify for loans, or be able to get good interest rates. When people are already struggling with debt, they are often concerned about how a solution will affect their credit scores and debt ratios. It is a common misconception that debt consolidation agencies can increase your debt. By understanding how consolidations work, you can understand how it will affect your debt ratio. Paula de la Torre Editor of the "Best Debt Consolidation Services" website -- http://www.BestDebtConsolidationServices.net -- pointed out; Consolidation services are loans that pay off higher interest credit card debts. Credit cards often charge oppressively high interest rates, some as high as 28% APR. Consolidation loans are given at a far lower interest rate. The interest rate often depends on your own credit and if you are applying assets as collateral If you have assets, such as equity in a car or home, you normally use that to get interest rates that are as low as 5% APR. This can effectively cut your monthly payments to a significantly lower rate. Even without collateral, you may still use a personal loan. These will have higher interest rates, but even at 10% APR you are still well below the average credit card rates. While the reduced interest can save you money on the loan, the terms of the loan will determine your monthly payments. The term of a loan is also its lifespan, or how long the loan is going to be made for. When you consolidate your debts through the refinancing of a house, you are typically looking at 15 or 30 years. This can provide a huge savings every month for you. Personal loans may be for a much shorter period, so be sure you look into the terms. Look at the payment schedules and compare it to what you are paying currently, without consolidation. You may be saving money in the end, but if the payments go up, then your monthly debt to income ratio may be higher. This is typically not the case though Debt consolidation is a great way to get out of debt. Apply the monthly savings to the debt principle, and you can find yourself free from the burden of debt faster than you thought. It provides a great way to save money, protect your credit, and keep your debt under control. If you are in debt, you should contact a professional to see if debt consolidation is for you. Further information about trusted and reputable companies for debt consolidation by visiting; http://www.BestDebtConsolidationServices.netAbout the Author:
Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases. What is a Good Debt Consolidation Agency? Payday Loans After Hours The Pell Grant - Free Government Money for Tuition, Books, and Living Expenses Can You Suggest a Reputable Debt Consolidation Agency? Make Money Online - Online Methods for Wealth Creation What on Earth Are Cash-Back Programs? What Are The Options With A Debt Consolidation Agency? Online Personal Loans - A Light In The Financial Darkness Things You Didn't Know You Can Do With Business Card Printing How A Good Debt Settlement Company Can Help Eliminate Unsecured Debts What Is The Most Reliable Debt Consolidation Agency? How Do You Know What’s The Best Debt Consolidation Loan Lender? The Basics of Small Online Personal Loans