Different Advantages Of Getting A Debt Consolidation Loan
A Debt Consolidation loan is a personal loan which lets you join various other debts into one monthly payment. Like for instance, if you have 3 credit cards, you may be able to get a Debt Consolidation loan to be able to pay off the credit cards and eliminate your credit card debt. This way, you should only make one loan payment per month instead of 3 separate credit card payments.
Before acquiring this particular kind of consolidation loan, there are many advantages and disadvantages. The following sections would explain the necessary criteria that you will need to be able to be qualified for a debt consolidation loan.
The Advantages of a Debt Consolidation Loan are:
usually your debt consolidation loan will have a lower interest rate than you are currently paying on credit cards. The loan should therefore reduce your interest payments and help you eventually eliminate your credit card debt. You can also be able to lessen your total monthly payments with the extended terms, a refinance or debt consolidation loan could provide as well as the lower interest rates.
Replacing several monthly payments into one payment is a good thing. This would make paying household bills a lot easier bringing some energy and time savings. As the loan interest rates are usually much lower, you could apply more money from one monthly payment directly to the principal and get out of debt much sooner than just making the minimum payment on different other credit cards et cetera.
Am I Qualified for a Debt Consolidation Loan?
You would have to meet the following criteria, to be able to qualify for a Debt Consolidation loan: You will have to have a source of steady income or ability to pay down the loan. The banks calculate your ability to service a debt according to your salary. It is essential to bring your most recent pay stubs and the previous year's tax return to the lender or the bank when applying for the loan. The bank will need a copy of your monthly finances in order to determine if you could meet your loan payments. Lastly, you may need some security like a car or a house or possibly even a co-signor in order to satisfy the prerequisites set up by the lending institution for debt consolidated loans and refinance.
Click to Download the pdf