When you are in the market shopping where to apply for a debt consolidation loan, you should follow a series of steps. There are no definite steps to follow, but some commonalities regardless of how you will look for and identify your preferred lender for debt consolidation. You may skip some of these steps in your quest to apply for a debt consolidation loan. In other instances, you may repeat some if need be.
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Steps to Apply for A Debt Consolidation Loan
1. Analyze your current debt
Analyze your debt portfolio, including personal loans, credit card balances, medical bills and other outstanding debts. Take note of the outstanding debts that you wish to consolidate. List them down with their respective interest rates.
2. Research for lenders
Do thorough market research and identify reputable lenders who would consolidate your debts. A reputable lender could be a bank, other financial institutions, credit unions or even an online lender. Compare their interest rates, fees on loan processing and terms of loan repayment.
Fortunately, finding a reputable lender is not harder than it was in the past. Today, the process has been simplified by PerosonalLoans, BadCreditLoans and CashAdvanace. These three pool reputable lenders who can accept to consolidate your debt if you meet their eligibility score. You only need to submit a debt consolidation application, and a lender who accepts consolidating your loans will offer you. You can accept an offer if multiple lenders accept consolidating your debt. This is an easy process made possible in the modern day and age.
3. Examine your credit score
Your credit score will directly dictate your eligibility for any debt consolidation loan. Furthermore, it will also inform your lender of the interest rate they should charge you. To know your credit score:
- Get a free copy of your credit report and take your time to go through it.
- Identify any possible errors before handing it over to your potential lender.
- If you have a low credit score, work to improve it before applying for a loan.
After implementing strategies to improve your credit score, get a recent copy of your credit score yet. See if you have improved from a low credit score that would inhibit your acceptability rate by your preferred lender(s).
4. Gather necessary documents
Lenders will often require certain documents to facilitate loan processing. Some of these documents include but are not limited to include pay slips, legal documents of your identity and bank statements. An extra cautious lender is likely to provide information regarding your debts. Have these and any other necessary documents beforehand. They will streamline your loan processing.
5. Apply for the loan
Once you have determined your potential lender, please provide them with accurate information. If a lender offers online applications, you can use their remote systems to submit your applications. If a lender does not support online applications, visit their offices or call to process your loan application.
6. Compare loan offers
Lenders who will approve you will notify you about your eligibility status. Please pay close attention to the interest rate each of them charges and the repayment period each demand for a certain loan amount. Counter-check if these terms align with your reason and purpose for debt consolidation.
7. Accept the best offer
After identifying a lender whose lending terms and conditions align with your debt consolidation needs:
- Accept their offer by signing a legally binding loan agreement.
- Ensure you understand the conditions of the loan and reach it for potential adjustment of some terms of conditions if you are uncomfortable with them.
- Let your lender guide you through grey areas.
8. Pay back your debts
After your lender has funded you, pay off your existing debts to the extent the loan allows you. By paying off multiple debts, you consolidate them into a single loan. The goal is to simplify the repayment process and condense your liability only to one party. Ensure you service your new loan as agreed upon in your signed loan agreement.
As you apply for a debt consolidation loan, remember that your financial liability will not be eliminated. Instead, you will ease the repayment process because you are not liable to fewer parties. Since you have condensed all repayment obligations to one lender, you are answerable to them; it is more manageable and easy to monitor outstanding balances.
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