Find the Right Loan with All About Debt

While All About Debt's mission is point you in the direction of the debt consolidation loan that's right for you, there are still some things you should watch out for when considering which one best suits your needs. Because the loan will remain part of your life long after the sting left by your credit accounts has subsided, it pays to compare the various products offered by lenders to make sure you get the best deal possible.

In Your Best Interest

Naturally, one of the first things you'll look at when considering a debt consolidation loan is its interest rate. But before snatching up the loan with the lowest rate, take few minutes to examine it closely.

• What are the fees? While a lender might not ask for money you're your pocket, watch out for costs that might be tacked on to your total loan amount. A larger loan amount will raise your monthly payment, and suddenly the loan might not be a better deal than one with a higher interest rate.
• What's the length of the term? While loans that give you more time to repay the money offer lower monthly payments, a short-term loan with an identical interest rate will save you a considerable amount of money in the long run. That's not to say you should get in over your head. Selecting a loan with payments that best fit your budget will lessen the chances of you falling behind or defaulting on the loan in the future. But if you can afford higher payments and a shorter term, it's always a good idea to pay off any loan as quickly as possible.
• Is there a penalty for paying off the loan early? While early payoffs are generally more associated with larger loans, such as those procured for cars or homes, there are circumstances in which you might want to receive a "paid in full" stamp early. For example, if you sell your home in a few years and use the extra cash to pay off your existing bills, suddenly the early payoff penalty will become a lot more important to you.
• How does the loan compare to the accounts your replacing? While finding a revolving account with a better interest rate is unlikely, it still wouldn't hurt to compare the loan you're considering to the revolving credit accounts you're replacing. When you factor in any additional costs associated with the loan, and consider how much longer you'd be paying on the credit accounts, would a debt consolidation loan still be worth your while?

Watch Your Back

While All About Debt's mission is to put people on the right financial track by hooking them up with the right debt consolidation loan, unfortunately there are companies out there with less than noble intentions. Some are more interested in padding their pockets than helping you fix your debt problems, while others are vultures bent on preying on unsuspecting borrowers in desperate situations. The biggest red flag in keeping an eye out for the latter is whether they ask for an upfront application fee. Asking a customer to pay for the privilege of merely applying for a loan is not only unprofessional, but also it's illegal. Giving money upfront to an unscrupulous lender will almost guarantee your application will be denied--and it will also guarantee you'll never see that money again.

Another thing to look for in a debt consolidation loan is whether it's really a loan at all. Some debt consolidation programs merely make deals with your creditors and act as a liaison by charging you one monthly fee, paying your existing bills and pocketing the difference.