Quick Debt Consolidation Loans

How fast one gets granted a debt consolidation loan depends on several issues. Unfortunately instant, or same day, loans are almost non-existent as most debt consolidation loans are unsecured and therefore require the lender to perform a fairly thorough check on your credit history. Typically, if an individual has been pre-approved there is a good chance that they will be able to secure a loan. Pre-approval means that based on a soft credit check the lender believes it to be highly likely that the individual receives a loan, although not guaranteed.

Let us first take a look at the types of credit checks lenders use.

  1. Hard Credit Check: Hard Credit Check is performed after the pre-approval process and the borrower has accepted the terms of the loan. This is a more thorough investigation into one’s credit history and it does affect one’s credit score.
  2. Soft Credit Check: Used for the pre-approval process and checking one’s credit score. This does not affect the credit score.
  3. Alternative Credit Check: Most commonly associated with payday loans and other high-interest loans. Usually, it only checks if the individual has a source of income or not.

Go Directly To Quick Debt Consolidation Loans

Another important point is whether one should seek a loan from a Direct lender or a Connector. To answer this question we need to look at what the difference is between the two.

Direct Lender: A direct lender is a lending institution that lends solely its products. These examples can be a bank or a savings and loan institution.

Connector: An intermediate that works with many different lending agents which gives them many different products to choose from.

Typically speaking, people prefer connectors because they have access to a wider array of products than direct lenders do. They also have an incentive to find their clients the best loan for their credit history and financial situation. Connectors are especially beneficial to those who have poor or bad credit.

Direct Lenders usually deal only with a specific region and do not have many loan options to choose from. The Connector, which can be thought of as a broker, has business relationships with many different lenders allowing them to find the best loan for an individual.

It is not common to receive loans that deposit as fast as the next business day, but it is not uncommon. The next day is much more likely if the loan amount is smaller than if it is larger. This is because large amounts require a more extensive manual check by the lender whereas a smaller amount does not. This checking period will affect payout times.

Debt Consolidation Loans With Fast Approval

For some people, payout time can be important. Let’s look at some of the factors that influence loan payout.

  1. Credit Score and History: It should come as no surprise that those with a higher credit score require less manual checking and therefore receive their loan faster than those with average or poor credit.
  2. Loan Size: As stated earlier, loans of smaller quantities are usually paid out faster as they require less manual checking to be granted.
  3. Lender: Some lenders simply pay out their loans faster than others. Some lenders have a policy that even after the person has been approved the loan will not be deposited until a few days after.

Many people wonder what type of interest rate they will receive. This has to do largely with one’s credit score and history as well as some other factors lenders use to decide. As of now, the average rate for a personal loan is 10.6%. This will go up as credit scores go down. For people with low credit scores, it may be necessary to increase their credit score to find an interest rate that they find satisfactory.

Let’s look at the most common and effective methods of increasing one’s credit score.

Lower Income to Debt (DTI) Ratio: Lowering the percentage of one’s monthly gross income that goes to paying off debts makes a borrower more attractive to a lender.

Consider Balance Transfers For High-Interest Credit Cards: Most credit card companies offer a period of no interest. It can be anywhere from three to six months. This can be helpful especially if one can transfer a balance from card to a card that carries a lower interest rate. The interest-free grace period allows having the entirety of the payments go to the principal and not interest.

Applying To More Than One Lender: Lenders have highly varying requirements and many lenders exist who are willing to lend to those with bad credit. When applying for loans companies only do a soft credit check meaning it does not affect one’s credit score. Shopping around to see what terms are available will not negatively affect one’s credit score.

Split Loan Into Multiple Loans: Those with a low credit score will have a difficult time securing loans for larger amounts. In this case, it is better to split the loan into two smaller loans. While it may be difficult for a person with bad credit to secure a loan of $20,000, it is likely easier to secure two loans at $10,000.

What is the Maximum That I Can Borrow: At most 200% of your yearly gross income. Example: If your average earnings is $80,000 per year, your max would be $160,000 providing they meet the lending requirements of the lender.

The Debt Snowball Method: One of the most common debt reduction strategies. The smallest balance is paid off first, with only the minimum payments made to the other debts. Once the smallest debt is paid off, the next smallest balance is attacked.

The Debt Avalanche Method: Essentially the inverse of the Debt Snowball Method. The debt with the highest balance is paid off first with the lost payment possible being made on all other debts. The advantage to this is one pays less interest over time as the largest debt is paid off first.

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