It
will be important for you to understand
exactly what your current level of debt
is. How much your monthly payments are
and how much of that monthly amount
is repaying the consolidation loan and
how much is just interest. You also
should draw up a schedule of when each
debt will be cleared and list down the
APR for each debt. Now armed with this
information you can approach lenders
to check if their terms are going to
save you money or not. Be totally mercenary
about this. You want to save money.
Now if you want to lower the monthly
payment amount, you may need to do this
by looking at a longer consolidation
loan period. If you do that, the total
amount of interest you pay may well
increase when you add together all the
payments over that longer period. Compare
the APR from that charged on your existing
debt to that offered by a new lender.
If your existing debt is made up of
cards then it is very likely that you
stand a very good chance of reducing
the APR. That would be especially true
of these are old credit cards or store
cards from a time when rates were much
higher than they are now. You will need
to check the terms of your old debt
agreements to see that they do allow
you to redeem the debt early and if
they contain any redemption penalties.
Even with a redemption penalty it may
still be better to move the debt, but
the benefit will not be as great and
you need to include those penalty costs
when deciding whether or not to move
the debt to a new lender.
