Bill Consolidation for Military Personnel is much the same as other consumer consolidation. Bill Consolidation is an approach used by consumers to combine all their outstanding bills into a single monthly payment. The debts are usually spread over a longer period and lower monthly amortizations. Loan consolidations are arranged by independent financial institutions that liaise between the debtor and the creditor.
Current loan consolidation plans in the market have the following characteristics:
- Longer payment period
- Lower monthly payments to make
- Only one agency to pay
- Usually the debtor's house is used as a collateral
Military Loans
Military loans are credit facilities made available for members of the military who are on active duty or in retired status. Some agencies that specialize in loans and financial assistance towards military personnel are the American Military Debt Management Services, Military Debt Management Agency, and AAFES.
It is very common to see financial institutions outside almost every military facility. They work with military personnel's need for financial assistance due to frequent move assignments, loss of job of the spouse because of the perennial movement, and creditors that deal directly and solely with military personnel.
Bill Consolidation Loans
As mentioned above, there are financial institutions devoted to the consolidation of military debts. Their main goal is to assist military staff in arranging their debts in such a way that there is only one affordable monthly payment to make. Pertinent interest rates are also renegotiated and the tenor of the credit is lengthened.
Consolidation plans are usually tailor-fitted to the debtor's capacity to pay, expected income, and other monetary measures to ensure that the new financial scheme will be met with success. Another option available is for the financial agent to loan out a considerable sum which the debtor will use to pay off all his other debts. The new and bigger loan will only work if its applicable interest rate is lower than the pressing debts.
Upon the availment of a military loan consolidation plan, the personnel will then make monthly payments to a single financing outfit at a repriced interest rate. The debtor should be very conscientious in paying his monthly bills as consolidated loans usually increase the interest rates once the monthly installment is not met.
Available Consolidation Plans in the Market
There are currently two major forms of debt consolidation in the market. The first being the home equity loan, wherein the debtor's house will be mortgaged, and the second one is the zero percent credit card.
Home equity loans act on the premise that by weighing in on your home's market value, the debtor can pay his monetary obligations. Having a high value mortgaged asset increases the credit limit that will be handed over in the consolidation plan. Also, this type of mortgage provides a tax break to the home-owner, another easing in the borrower's financial obligations.
For those who don't have a house to mortgage but financial help in managing their debts, the market is now offering the zero percent credit card. This card will allow debtors to pay in trenches every month with a single digit or no interest rate. All the previous debts will be aggregated into a single account and only one payment must be met regularly. When using this loan consolidation tool, payor must meet the minimum requirement per payment to avoid the interest rate from jumping up.
The major appeal of debt consolidation is convenience. A borrower no longer needs to pay off several creditors with varying interest rates and due dates. They only need to enroll and be approved for a loan consolidation and all payments will be slimmed into a single monthly payment with a single re-negotiated interest rate and longer paying periods.
Pre-Cautions in Taking out Consolidated Loans
Although loan consolidation may seem attractive at first glance to the military currently struggling with financial matters, it is always best to do your homework before signing any agreement.
First, check the interest rate of the loan consolidation. It should be lower than the total interest that is being paid to the various debts. Repricing is a tool that is always almost present in loan consolidation. Make sure this works for you by checking the trends and forecasts on interest rates over the period of your tenor.
Second, when borrowing equity against your home, make sure that you have enough expected and tangible cash flow available for the entirety of the loan. The monthly payments should be met at all costs to prevent losing your house. Initial delinquency in paying the amortization on time is usually sanctioned by increasing the interest rates. Future violations may mean forfeiting your house.
Third, ensure by all means necessary that the financial institution offering loan consolidation is legal and accredited. Check your local government agencies to make sure that the company you are dealing with is legal and has enough capacity to withstand its obligation to you and to your creditors.
