Personal Loans For Debt Consolidation

It can be tough to have a significant amount of debt, especially when the interest charged for unsettled balances is too high. Debt consolidation can help you find your way out. Either by reducing the interest charged on your debt or merging several monthly installments into one single amount or a combination of both.

Our suggestions when it comes to personal loans for debt consolidation:

  • It is advisable to choose a payment term that’s neither too long nor too short. A long settlement term means that you are paying more for your loan whereas a short settlement term means that your monthly payment is more expensive which could be burdensome to you. It is best to find a solution that works best according to your capacity to pay.
  • If you have to borrow $30,000 or more, we recommend you split the amount in two, and try securing for two small loans instead of only a single big one. Most of the time, it’s easier to acquire two less substantial loans than a single loan for exactly the same amount.
  • Pick at least two money lenders companies to apply for the loan so you are able to compare rates of interest and other terms. Almost all loan providers will perform a soft credit check procedure that won’t have any negative effect on your credit score.

View Best Personal loans for Debt Consolidation

About Debt Consolidation

To put it in a term that is easily be understood, debt consolidation is the process of combining several outstanding debts into one single loan. Debts like personal loans, outstanding credit card balances and any other kind of financial debt are merged together under a totally new loan called debt consolidation loan. The debt consolidation loan basically will help borrowers to achieve their payment goals quicker and in a more efficient manner. With a debt consolidation loan, a customer applies and receives consent for a completely new loan that assures a lump sum payment. The amount of money received, minus any associated fees, can then be used to settle other debts.

However, the borrowers need to understand that their debt won’t be magically cleared by getting a debt consolidation loan. The debt is still there, only the configuration is modified so their monthly repayments become more achievable or the final borrowing cost (i.e., the rate of interest) will be less expensive.

The Truth About Guaranteed Debt Consolidation Personal Loans

If you were refused a personal loan, opting for guaranteed debt consolidation loans could sound appealing. Unfortunately, there is no money lending company that can guarantee with 100% certainty that any individual will get a loan. Some sort of required credit check is bound to take place. The difference regarding the applicants’ criteria between these money lenders however can be quite substantial. Some companies only accept applicants with a credit score above 700 while some might approve applicants with 500 credit score and some though occasionally might accept applicants with even lower credit score.

Points to Watch Out for When Considering Personal loans for debt consolidation

When you are deciding if a debt consolidation loan is really a right fit for you, there are certain issues for you to put into consideration before you go any further. First, lots of loan providers charge premiums for debt consolidation loans.

The possible premiums that might be charged include:

  • Late payment fees – incurred when a monthly payment is paid after its due date
  • Prepayment fees – incurred when a loan balance is settled before its actual payment date
  • Origination fees – demanded when a loan is granted
  • Funding fees – imposed when a loan is approved or funded
  • Application fees – demanded when you are submitting your application

These fees are charged alongside the interest rates provided by the money lender on a new debt consolidation loan. Hence, it is important that you are in the loop on which fees are charged on the loan so that you know that it is an affordable solution for your debt repayment in the long run.

Among the charges that people often disregard is the penalty for prepayment. The penalty is incurred when you pay off a loan balance before of the repayment term ends. If you are planning to clear the balance of the loan that has a prepayment premium, it may not be smart to get a debt consolidation loan for that purpose. You will end up having to pay for the penalty.

A Loan with High Interest Isn’t All Bad

You as the applicant also need to be aware that it is possible for the debt consolidation loan to involve a higher interest rate than what was anticipated. The money lender companies will check your income, your credit history, and perhaps your additional financial assets such as savings account balances to verify your eligibility for a new loan. If certain qualifications are not met, a loan with a high interest rate could be proposed.

If that is the case, you have two option. One is to hold back until your credit score gets better, and subsequently apply again when you’re a better prospect for a loan. Another is to go ahead with debt consolidation loan offered to you, despite its high interest rate, this option is preferable if your current debt is hard to cope with each month or you prefer to make one single payment instead of several separate payments.

The Conclusion

Choosing to consolidate your debt is not a simple decision to make. You have to take some time to consider all factors in order to make a concise judgment to pick which path of debt consolidation is best for you, be aware of how well is your position to obtain a debt consolidation loan or alternative help by means of a settlement service, and to be in the loop of all the charges involved with either. It is important to be sure of your own capability to meet your monthly repayments moving forward and to commit to the duration of the repayment term for the debt consolidation loan.

Think thoroughly of your need for a debt consolidation loan, your eligibility to qualify for a consolidation loan, and your determination to avoid making any further debts before you sign for a new debt consolidation loan.

View Best Personal loans for Debt Consolidation

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