The Skinny On Military Consolidation Loans
Just because they are in
one of the most honorable professions in the world, it does not
mean that military personnel do not get short on cash. The fact
is that although the majority of military personnel will not hungry,
many of them will find it hard to become rich. But of course, when
they badly need cash, they can easily take out a loan.
This ease in accessing credit has inevitably led
to the birth of military consolidation loans. Like other consumer
debt consolidation loans, military consolidation loans combine all
the debts of military personnel. In turn, military personnel only
need to pay all their debts through a single monthly payment.
The monthly amortizations on military consolidation
loans are spread out over a longer time period in lower amounts
than the total monthly payments on their loans (when they were still
not consolidated). The payment is made only to one creditor.
Military personnel on active duty often take on
loans. Working on different assignments leads the military spouse
to lose his or her job, and it is not uncommon for military personnel
on active duty to seek out loans outside the military. There are
agencies that are dedicated solely to assisting military personnel
consolidate their loans. These are the Military Debt Management
Agency, American Military Debt Management Services, and AAFES.
These agencies arrange for their debts so that
they need only make one monthly payment. They re-negotiate the interest
rates and the term of the loans. They also make sure that any debt
consolidation plan is fitted toward the military personnel's capacity
to pay, expected income, and other monetary considerations.
But military personnel definitely do have the
option of taking out a big loan and paying for all of their debts
with that sizeable loan. This option, however, will only work if
the interest rate is much lower than the existing debts.
If military personnel opt for military consolidation
loans, they then make monthly payments to a single loan agency.
The monthly bills have to be judiciously paid, since interest rates
increase if a monthly payment is not met.
Like other consumer loan consolidation programs,
military consolidation loans are of two types: home equity loan
and zero interest rate credit cards. In a home equity loan, a debtor's
home is used as a collateral. Zero-interest credit cards, meanwhile,
allows military personnel to pay their debts with a credit for zero
interest rate. The previous debts are then summed up and the military
personnel then pays one monthly amount. The minimum payments must
be made to prevent the interest rates from jumping up.
Whatever option the military personnel chooses,
caution must NOT be thrown to the wind when it comes to military
consolidation loans. Military personnel must always make sure that
the interests they are paying for the loan consolidation is lower
than the total of the interests on previous debts.
Cash flow should also be taken into account, especially
when it comes to home equity. While a delinquency in the payment
jacks up the interest rates, prolonged delinquency can actually
lead to the repossession of the house.