debt consolidation loan: loan

Wednesday, February 20, 2008

loan

A loan is a type of debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.

Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.

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Debt Help

For most people, credit cards and loans are useful tools for financial planning which help us manage our finances and spread payments for things which we need today. Sometimes, however, circumstances change and it becomes impossible to manage all of the payments on our debts. Arrears can mount up, penalties are applied and eventually we can find ourselves borrowing simply to pay the minimum payments on our existing debts. In this situation credit is out of control and it is impossible to pay back our debts without professional help.

Objectives of the consolidation

In the individual accounts of a company likely to establish group accounts, the value of the titles registered with the assessment is the only data element which one has on a held participation.This value generally reflects the cost of acquisition of the titles but does not allow obviously to apprehend the financial activity of the company. Indeed these titles represent actually other permanent assets, the financial position and the results of which the group with the responsibility.
The objective of the group accounts is to provide to the external reader a more economic vision of the activity, inheritance and result of a whole of entities held by a consolidating company. The group accounts are freed from the taxation rules and legal of separation of the inheritances on which rest the individual accounts to propose a purely economic vision . For that they rest on the principle of preeminence of economic reality on the legal form .
The consolidated financial statements allow to arrive to a faithful translation of the performance and financial position of a group as of flows of treasury which it generates. To final, they present a whole of entities as if they formed only one of them.
The principal technique of the consolidation is to substitute for the value of the titles held by the parent company the whole of the credits and passive of the consolidated company. When the parent company does not hold the totality of the capital of the company girl, the not held portion appears in the passive of the assessment under the minority denomination of interest

Credit Counseling

If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Debt Management Plans

If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.
In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you’re participating in the plan.

Comparing Debt Consolidation Loans

If you've been shopping around for debt consolidation loans and you've gotten multiple quotes, make sure that you're comparing apples to apples. First - who are you borrowing from? Is it a traditional lender or one who is considered second tier? Is it a larger bank or a smaller one? Second, what are the terms of the loan? Is it a 5 year, 10 year or 30 year loan? How do the monthly payments work? Is there a prepayment penalty? Finally, what is the interest rate? Is it higher or lower than you expected? Is it fixed or variable? When you align all of these things on your loan comparison chart, you should be able to get a good feel as to which one offers the most benefits with the least risk.

Fixed Rates for Bad Debt Loans

Variable interest is a dangerous thing. If you have a credit card that starts with a 0% interest rate and then creeps up on you, or if you have a 5 year ARM mortgage or home equity loan, then you need to watch your rates closely or you'll quickly get the short end of the stick. Look for fixed rate debt loans at reasonable interest rates because the stability of these payments will help you plan your finances more effectively. Keeping track of multiple variable interest rate loans will give you a major financial headache. When it comes to debt loans, follow the KIS principle - Keep it Simple!

Borrowing Debt Consolidation Home Equity Loans

Whether you have credit card debt, personal loans, high interest car loans or other debt loans, taking out a home equity loan to pay them all off can be a great solution. It all depends on the interest rate. If you can get the right amount at the right interest rate, a debt consolidation loan out of your home equity can absolutely save you time and money. If you can't get enough equity out to cover your debts, or you can't get an interest rate that is lower than those of your existing loans, consider another option. Make sure you shop around with local banks, mortgage brokers and online to make sure you are paying the lowest closing costs and interest rate possible.

Finding Debt Consolidation Loans

Loans, like credit cards, can get overwhelming if you have many of them. Different interest rates, due dates, amounts and lenders can create situations where you're paying too much money in interest and sometimes you end up missing payments as well. Eliminate the confusion by consolidating your debt into one, lower interest rate loan. One payment, one lender, one interest rate and you are done. The most important thing is to work on changing your spending habits so you can maintain this cleaner debt loan situation.

Loans and Debt

Balancing you loans and your debt is a tough thing to do and it's very easy to get behind on debt loans. You need to assess your debt situation and really make some changes to move forward. Sometimes the decisions can be tough. You may need to bring in a roommate, or downsize your apartment or condo. You may need to trade in your leased or expensive car for one that is more economical. You may need to substantially change your shopping or dining habits to get a jump on your debt situation. First thing's first though - order a copy of your credit report and put together a list of all your debts and your monthly payments. Spending is like any addiction: once you acknowledge the problem and face it, you are on your way to recovery.

debt consolidation loan