Help Desk

What is a Debt Consolidation Loan?

A Debt Consolidation loan allows you to consolidate many other debts into one. For example, if you have three credit cards, you may be able to eliminate your credit card debt by getting a Debt Consolidation loan to pay off the credit cards, so that you only have one payment each month instead of three.

Advantages of Debt Consolidation loans

• Your Debt Consolidation loan may have a lower interest rate than the rate you are paying on credit cards, so the loan should reduce your interest payments and help you eliminate your credit card debt, eventually.

• With the lower interest rates and/or extended terms a debt consolidation and refinance loan may offer, you may be able to reduce your total monthly payments.

• You replace many payments each month with only one payment, which should make your monthly household budgeting easier

• Your Debt Consolidation loan may have a lower interest rate than the rate you are paying on credit cards, so the loan should reduce your interest payments and help you eliminate your credit card debt, eventually.

• With the lower interest rates and/or extended terms a debt consolidation and refinance loan may offer, you may be able to reduce your total monthly payments.

• You replace many payments each month with only one payment, which should make your monthly household budgeting easier.

Do I qualify for a Debt Consolidation loan?

To qualify for a Debt Consolidation loan you must meet the following:

• The bank will require a copy of your monthly budget to determine if you can meet your loan payments.

• You must be working, or have some other source of income allowing you to repay the loan. Banks calculate your ability to service a debt based on your income, so bring with you your most recent pay stubs, and last year's tax return, to the bank or lender when you apply for a debt consolidation loan.

• To satisfy prerequisites set up by the lending institution for debt consolidation and refinance loans, you may need a co-signor or collateral (such as a car or a house).