CONSOLIDATION LOANS INFORMATION

Please see information on Consolidation Loans below.

        

Consolidation Loans

Tired of struggling to cope with your finances? Debts spiralling out of control? A consolidation loan might be able to help...

What is a Consolidation Loan?

A consolidation loan or debt consolidation loan is a loan which works by gathering your existing multiple debts into one monthly payment. You no longer have to juggle numerous debts but are left with one manageable repayment plan. Often interest on the loan is frozen or reduced. A consolidation loan is designed to give struggling borrowers the chance of paying off their debts in one easy loan.

An example of a consolidation loan...

Mary has three credit cards and her debts are getting impossible to manage. She has racked up at least $20,000 in debts. She applies for a consolidation loan and can pay for her three cards via one monthly payment instead of three.

The loan she has chosen has a lower interest rate so her debt is now more affordable. The term of the loan is extended so her monthly payments are lower she is now able to fit her debts into the rest of her life and they no longer dominate her time and energy.

Do I Qualify for a Consolidation Loan?

The criteria for a consolidation loan depends on the provider.

  • Some lenders / banks will ask for a minimum income so that you can meet loan repayments. They may ask for your tax return from the last year and proof of your income.
  • In addition they may ask for collateral such as your car or home but this is not always the case, so find out in advance. Signing up a significant asset as collateral puts you at risk of loss if you cannot meet loan repayments then the lender could seize your home or car! Please make sure you consider this before signing up.
  • You may undergo a credit check to determine your suitability for the loan.
  • Other criteria will most likely include a minimum age requirement.

How Can I Apply?

This is the easiest part. Most consolidation loan providers offer a straightforward online application method. Using the Which Way To Pay comparison page, weigh up the pros and cons of the various providers before choosing the one which suits you best.

Once you have found one, you can click on the 'More Info' button to enquire further. You are under no obligation and most providers offer a clear application form online so you can take the application process step by step so you don't feel pressured.

Some banks may offer consolidation loans visit your nearest branch to find out more. Remember to compare their offer with the online lenders, as you might get a better deal!

What are the Benefits of a Consolidation Loan?

Consolidation loans can help you to eliminate your debts. Here are some paint plus points:

  • Pay off multiple debts with one affordable monthly payment
  • Lower your interest rate
  • Deal with just one low payment each month
  • Make your debts more manageable

What are the Disadvantages?

There are some disadvantages to consolidation loans, as with any loan product. One factor to remember is that just because your debts are more manageable, they are still there and you still have to pay off the whole amount.

By taking a consolidation loans, you might extend the length of time you spend paying off your debts (though this often means the payment is lower each month).

Some consolidation loans require the borrower to put up their house or car as collateral. This is risky because it means the borrower could lose their home / car if they are unable to meet repayments. Always think carefully before taking a secured loan.

        


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