A debt consolidation loan is a great solution if you are struggling to pay multiple creditors. A financial institution will offer you one large loan that enables you to pay off all your existing debts, leaving you to make a single monthly repayment to your loan provider.
This is an attractive option as it basically streamlines your repayments into one single amount paid each month to your loan provider which is generally less than the multiple payments you were making previously. As an added bonus, the interest rate on a consolidation loan is usually lower, so you will save money in the long run through debt consolidation.
That being said, there are only certain debts that are suitable for payment with a debt consolidation loan. Mortgages cannot be included in existing debt in order to be eligible however credit card debts, loans and utility bills are eligible for inclusion.
Anyone applying for a debt consolidation loan must have a reasonable credit rating in order to be successful in their application. They must also be able to demonstrate that they have suitable employment and the means to make regular repayments on their outstanding balance on top of their day to day living expenses.
When taking out a debt consolidation loan, it is important to use the opportunity wisely to get out of debt. It is vital to resist the temptation to take our further credit cards and loans in order to increase spending power as it will lead to a spiral of debt and financial difficulties.
For more information on how debt consolidation can help you, contact the experts Sky Financial – The Mortgage Centre today. 780.486.6639.