Many people apply for a debt consolidation loan in order to eliminate their debts. Debt consolidation has advantages and disadvantages. You must understand the process before choosing this option. For this to work, you borrow enough money to repay all of your debts. The monthly repayment of the loan is usually lower than the previous payments on your old debt. The main benefit of consolidating your debts is that it will help you better manage your debts. Below are some tips to help you get a debt consolidation loan.
Calculate your total debt
Collect all your credit cards and add up your debts. Adding all the debts will allow you to know how much you will need to borrow to clear them. Having a list of all the debts you have on each credit card helps you not to forget about it.
Decide which debts you want to consolidate
Decide which debts you want to consolidate. Choose the debts with the highest interest rates because this is what makes your debt accumulate the fastest. If you want to use a debt management company, you may need a certain balance to qualify for consolidation.
Decide which warranty to use
Choose what you will use as collateral to get the consolidation loan. Your house, your vehicle or your property can be used as collateral. Call an appraiser or appraiser to estimate the value of what you have chosen as collateral. If you do not own any assets, you may need to consider using a debt consolidation company.
Provide proof of income
Most debt consolidation companies will not work with you if you can not provide proof of a stable income. Some lenders may ask you to provide a copy of your budget or monthly expenses to help determine the type of payment you can afford.
Check interest rates
Find out the interest rate applied to your loans because they will have to be erased. Contact your creditors to find out how much interest they charge on your accounts. This will help you get the actual balances so that when you pay them, you will not have any remaining balance on your old debt.
Find a lender
Use the Internet to search for lenders because you have a choice of a number of services. Check the yellow pages or ask people who have followed the process to refer to them. Make sure a potential lender is reliable before selecting it. Once you have found a lender, you must convince him to give you the loan, which means that you show them that you are worth the risk. Call the lender to see if there are other criteria needed to qualify for the loan. Your income can determine the debt consolidation lender you choose.
Request a loan application form
Be sure to read all terms and conditions before completing the form. Be honest about yourself and your finances on the form as it will determine whether you get the loan or not. Once you have submitted the form, you will have to wait for the lender to make a decision.
Debt consolidation is not always the best option. In fact, many experts say that debt consolidation only moves your debts from one lender to another. The alternative, better and better, is debt settlement. With debt settlement, you will only pay a small percentage of what you owe.