Debt Consolidation Loan
Take better control of your finances by consolidating all eligible unsecured debts into one single loan. By combining your high interest rate loans into one lower rate, you can manage and eliminate your debt over a long period of time. Debt consolidation loans can be a helpful way to control your personal debt, and improve your credit score.
A debt consolidation loan is a personal loan you use to pay off all your outstanding debts from different lenders. It can simplify your budgeting by replacing different lenders with one lender. However, debt consolidation is not a perfect one-size fits all solution. You must weigh the pros and cons before deciding if it will help you better manage your debts.
Things to do before you apply for a Debt Consolidation Loan
Getting a debt consolidation loan is a major financial decision that should not be taken lightly. Before you apply, you should consider alternatives, figure out how you will make payments and make sure you are finding the best rate available.
#1. Set up a repayment plan and budget
It is essential to plan how you will make the new loan payments, especially if you have previously struggled to keep up with minimum payments. You can:
Assess your current debt total by adding all your loans, including your credit card balances, car loans and any other accounts with all your lenders.
Track your spending to see where your money goes each month, identifying areas where you can cut back.
Compare your debt payment obligations and your spending to create a budget and determine how much you can realistically allot to your debt each month.
Once you know how much you can allocate toward your debt each month, make sure the terms of your loan reflect that.
#2. Avoid Scams
Ensure you borrow only from trusted, well-established legitimate lenders to eliminate debt, be careful of debt consolidation scams. Red flags include aggressive sales representatives, guaranteed approval, and quick fix promises, as well as requirements such as upfront payments before loan approval or access to bank accounts for automatic withdrawals.
#3. Be Disciplined
A debt consolidation loan can wipe the slate clean and allow you to start fresh and free you from debts. However, you must refrain yourself from going into new debt to manage on top of your debt consolidation loan.
You will go through several steps to obtain a debt consolidation loan. This includes applying (with pre-qualification), choosing your loan terms, finalising your application with a hard inquiry, and closing.
Let BizBridge help you work out the approval requirements for debt consolidation loans that may include credit score, debt-to-income ratio, and credit history to increase your chances of approval.
Apply here or contact our professionals at BizBridge for advice.