Comparing Debt Consolidation Loans
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How should I compare multiple debt consolidation loans and quotes?
If you have been shopping for debt consolidation loans and have gotten multiple quotes, you may be wondering how best to compare them. Here are a few tips on what to look for to make sure you compare based on the same factors.
- First, what are the interest rates? Now, you may think that I am looking for an answer of 6% or 7.5%, but what I really am looking for is an answer of either ‘fixed' or ‘variable'. You see, as important as the interest rate number, is knowing whether it will ever change. Sure, you may be able to get a 3.9% rate from one lender, but if it is a variable, it could be 10% by the end of the year. Whereas with a fixed 6.99% rate, it will always stay 6.99%. Be sure to compare fixed to fixed and variable to variable when comparing debt consolidation loans.
- Next, what are the terms? Can you pay the debt consolidation loans off as early as you like, or will you be penalized for doing so? This question is one that gets a lot of people because they do not realize that there are often stiff penalties for paying debt consolidation loans off early. Make sure you compare these types of terms on each loan you are being pitched.
- Lastly, where are you borrowing from? There is definitely some security in borrowing from a large institution instead of a smaller lender. While a smaller lender may be more willing to work with you for your loan, you never know what will happen to them in the future. With a large bank or lender, you will know that your debt consolidation loans will always be serviced in a professional manner.
There are many other factors that you should take into account when it comes to debt consolidation loans. Do not be afraid to get one of the lending professionals to walk you through a comparison. If they gave you a good quote, they should have no problem doing so.