Debt consolidation in Colorado - How to choose the best companies

Colorado is not exempt from the problems plaguing the rest of the country. By the fourth quarter of 2022, it is anticipated that the effects of the Ukrainian conflict, inflation, rising interest rates, and ongoing supply chain issues will significantly hinder the state's economic growth.

Of course, those problems impact people who live in Colorado. The state's June 2022 Economic & Revenue Forecast noted that lower-income households would continue to have special difficulties due to inflation. A rise in the number of Coloradans taking on second jobs and using up their savings was also mentioned in the report.

Unsurprisingly, the high cost of living forces many state residents to depend too heavily on their credit cards. According to a 2022 WalletHub survey, Colorado has some of the least manageable median credit card debt among the 50 states.

Fortunately, Colorado debt relief programs, including debt consolidation, can provide some help.

What is debt consolidation?

Debt consolidation is the process of combining several debts into a single payment with a low-interest rate. When you have a lot of debt, and it doesn't appear that you're making any progress toward paying it off, this can help you keep organized and possibly save money.

What types of debts can you consolidate in Colorado?

  • Credit card debts
  • Utility bills
  • Medical bills
  • Payday loans
  • Private student loans

What are your debt consolidation options in Colorado?

Credit card consolidation - As of 2022, the average resident in Colorado had $6,762 in credit card debt. In a post-pandemic environment, when consumer spending is starting to soar again, that number appears to rise. The main worry is that as credit card use grows, other economic crises like rising oil prices and global instability seem firmly entrenched until 2022, thanks mainly to Russia's invasion of Ukraine.

Consumers who can control their debt by reducing or ceasing their usage of credit cards and concentrating on paying it off may find that their financial situation is much better than others who do not. One way to do it is to enroll in a credit card debt consolidation program to accelerate the repayment procedure.

Payday loan consolidation - Consumers in a bind right now may get support from payday loans and other short-term loans. Recent trends demonstrate that many customers rely on taking out one loan, paying it off with another loan, and repeating this costly cycle until they either run out of money or are compelled to find alternative ways to pay off their debt.

Fortunately, several debt relief companies specialize in consolidating payday loans and assisting Coloradans in breaking free from the vicious cycle of debt.

Medical bill consolidation - It is the process of consolidating medical bills into a single monthly payment plan. It helps consumers save interest and avoid collection calls and bankruptcy in the long run.

A clear understanding of your debts, including the total amount owed, the parties to whom it is owed, and the due date, is the first step in consolidating medical debt.

The next step is to get in touch with the hospital or service provider to find out if any financial aid programs or repayment options may be used to lessen the weight of the debt and prevent it from going to collections.

Following that, consumers can start to think about debt consolidation solutions. They can call 800-530-OVLG to know about the right option.

How much can you save with debt consolidation in Colorado?

Is debt consolidation a good idea? This calculator can help you decide if debt consolidation is your best option. By entering the correct data next to each category of your credit cards, vehicle loans, and other installment loans, you can find the program that fits inside your spending limit.

Pros and cons of Colorado debt consolidation

Pros

Fixed-term repayment plan

You will know exactly how much you must pay each month and when your final payment is due. Paying off a high-interest credit card could take years if you only make the minimum payment.

Improve credit

A debt consolidation loan may initially cause your credit score to drop slightly because lenders will make a hard credit inquiry. Still, it will probably raise it over time. That's because timely payments will be simpler to make. Paying a single monthly bill on time should significantly increase your credit score because your payment history makes up 35% of your credit score.

In a Colorado debt consolidation program, your credit score will gradually increase when you make monthly payments on time.

Additionally, you'll have a better credit utilization ratio and a stronger credit history if any of your previous debts came through credit cards and you continue to use them. Your credit score comprises 30 percent of your outstanding debts and 15 percent of your credit history. These two areas can suffer if you close your cards after paying them off. To improve your credit score, keep them open.

Reduced interest rates

The typical credit card rate is about 18% as of September 2022. The average personal loan interest rate is under 11% simultaneously. You're likely to get a cheaper interest rate with a debt consolidation loan and program than what you're now paying on your credit card, though prices do vary depending on your credit score, loan size, and term length.

Stress-free financial life

When you combine all your debt, there is only one payment due each month, so you no longer need to be concerned about several payments. Additionally, you can budget with certainty because the monthly payment is the same.

Reduced debt collection calls

When enrolling in a debt relief program and making payments, creditors stop worrying about delinquent accounts, leading to reduced collection calls.

Cons

Financial issues won't be resolved on their own

Debt consolidation does not ensure you won't accumulate more debt in the future. You might start splurging once you are debt-free if you have a history of doing so. Create a reasonable budget for yourself and follow it to help prevent this. Starting an emergency fund that can be used to cover unforeseen expenses without relying on credit cards.

You may have to pay upfront fees

There can be upfront costs for debt consolidation loans. These may consist of annual fees, closing costs, and origination fees.

Ask about any fees upfront, such as those for making late or early loan repayments, before taking up a debt consolidation loan. Depending on your lender, these costs could cost hundreds or even thousands of dollars. You should consider these costs when determining if debt consolidation is a good option for you, even though paying them can still be worthwhile.

You might have to pay more

The interest rate on your debt consolidation loan may be higher than what you are now paying. Numerous factors, including your current credit score, could contribute to this.

The loan amount and period are additional factors that could result in higher interest rates. Although you can have a reduced monthly payment if you extend the loan term, you might pay more in interest over time.

Consider debt consolidation, but balance your short-term objectives against your long-term demands to identify the best course of action.

Missing payments will cost you more money

You'll probably have to pay a late fee if you forget to make one of your monthly loan payments. Additionally, some lenders may impose a returned payment fee if a payment is returned owing to insufficient money. These surcharges may significantly increase your borrowing costs.

Additionally, since lenders often notify credit bureaus of a late payment when it is 30 days past due, your credit score may be badly affected. You may find it more challenging to qualify for loans in the future and get the best interest rate.

If the lender offers an automated payment plan, sign up for it to lower your chances of missing a payment.

What to do before consolidating debts in Colorado

When looking for debt consolidation services in Colorado, OVLG urges residents to be cautious. Sadly, there are a lot of for-profit companies with a bad track record. A deal that seems too good to be true almost certainly is.

We are aware that consolidating debt can be exhausting and frustrating. Many people have told us they wish they had done more research before signing up with a company, but they were eager to get out of debt, and in some cases, things got worse.

We advise you to take your time with your research and consider the short- and long-term effects, including the total debt consolidation costs and what harm might be done to significant factors like your credit history and score. There is a lot at stake, so being honest, asking questions, and researching will increase the likelihood of finding a debt solution that meets your needs.

What are the three ways to consolidate debt in Colorado?

Enroll in a debt consolidation program

  • Calculate how much you owe on your credit cards, medical bills, payday loans, utility bills, etc.
  • Calculate how much you pay on interest.
  • Attend a free counseling session and enroll in a debt consolidation program.
  • Make a single monthly payment on your debts at a reduced interest rate.
  • Continue this process until your finish the program successfully.

Utilize a personal loan to consolidate bills

  • A personal loan is an unsecured loan with a set monthly interest rate that aids with credit card debt repayment.
  • The objective is to obtain an interest rate lower than the APR on your credit cards. As little as 5.99% APR may be offered for personal loans.
  • Your monthly payment won't fluctuate if you have a fixed interest rate. In contrast, the interest rates on credit cards are variable and subject to fluctuation.
  • Because a personal loan is seen as an installment loan, your credit score may rise as a result.
  • A one-time origination fee that is part of the personal loan's APR is possible.
  • Typically, you need to have outstanding to excellent credit to be eligible for a personal loan. You can submit a straight application online with numerous lenders.
  • This credit card payment calculator demonstrates how much money you can save by combining credit card and personal loan debt.

Get a credit card with no APR

  • Consolidating high-interest credit card debt can be done with the aid of a credit card with a 0% APR.
  • You can get a credit card with a 0% APR if your credit is good or excellent.
  • Your credit card balance can be moved to a new card with a 0% APR.
  • A credit with a 0% APR, as the name suggests, means that you won't pay any more interest on the balance on your credit card for a predetermined time, typically between 12 and 18 months.
  • Some credit cards with 0% APR also provide 0% APR on brand-new purchases throughout the same time frame.
  • After the 0% APR term expires, your amount will accrue interest, and normal monthly payments will start.
  • Some credit cards with 0% APR levies a minimal debt transfer fee, while other 0% APR cards don't.

Should you go for a debt consolidation program or a loan in Colorado?

It depends on the types of debt you want to consolidate. A debt consolidation loan is a good option if you want to consolidate student loans. You can't consolidate it through a program. Again if you want to get out of debt within 3 to 5 years, a debt consolidation program is a viable option. But then, if you want to get rid of debt instantly and replace it with a new one at a lower interest rate, a consolidation loan is the best option.

How to choose the best debt consolidation companies in Colorado

Fees Check if it is as per the FTC laws.
Reviews Check if customers have given positive reviews and ratings. Too many negative reviews and poor ratings are warning signs.
Accreditation Check if the company has BBB accreditation. If the BBB rating is C, D, E, or F, it is a warning signal.

How to Obtain a Loan for Debt Consolidation

Shop around

The APR is the most crucial consideration when comparing personal loans. You'll want the lowest rate you can find to help you pay off your existing obligations more quickly. However, you should also consider the fees associated with each loan, the amount you can borrow, and the time frame for repaying the loan.

Find lenders

For approval, lenders typically require a credit score of at least 660. Additionally, it's unlikely that you'll get worthwhile rates unless you have exceptional or excellent credit. Additionally, not all lenders will permit you to combine several types of debt. For instance, many don't allow consolidation of student loans, and some lenders only offer certain types of consolidation.

Obtain pre-approval

Although pre-qualification doesn't ensure acceptance, it will give you a sense of your likelihood of approval and the potential rates you could be offered.

Send in your application

You can fill out an online application once you choose a loan offer with a low enough APR and a high enough loan amount. You might be able to accomplish it in person or over the phone as well. Make sure you include correct and factual information on the application.

Wait patiently

Frequently, lenders will make decisions on debt consolidation loan applications right away. It won't always be the case, though. The entire decision-making and funding process should take about seven business days. Depending on the lender and your particular circumstances, the waiting period could be shorter than that or as long as a month.

You'll utilize the funds from your debt consolidation loan to repay your debts with your creditors once you get them. After then, the organization that provided the consolidation loan will be the sole recipient of all of your debt. To ensure that the lender sends favorable monthly information you the credit agencies, make sure to send in your installments on schedule.

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