The Ultimate Guide to Debt Consolidation Loans – Everything You Need to Know

Your budget and credit score can both be better managed with the aid of a debt consolidation loan. However, it is important to understand the terms of your debt consolidation loan before you apply. Banks, credit unions, and reputable internet lenders provide debt-reduction personal loans. Compare rates, fees and repayment terms to find the best option.

What is a Debt Consolidation Loan?

A debt consolidation loan like those offered at Symple Lending rolls multiple outstanding balances into a new loan with a single monthly payment. It typically provides a lower interest rate than your existing credit card or personal loans. This can lower your monthly payments and hasten your debt repayment. Various expenses, such as an origination fee and a prepayment penalty (if your prior debt has one), may be associated with debt consolidation loans.

It’s important to understand these charges before you take out a loan. If you have enough income now and in the future to easily meet your new monthly payment, you should only consider getting a debt consolidation loan.

If not, opting for a debt management plan or other alternatives might make more sense. Two examples are a home equity loan or a credit card with a special 0% APR debt transfer rate. You could also negotiate with your creditors to reduce rates or fees on your outstanding debt.

What are the Benefits of a Debt Consolidation Loan?

Getting a debt consolidation loan can make it easier to manage multiple high-interest debts by combining them into one monthly payment. You can also save money by taking advantage of lower interest rates based on your creditworthiness and the new loan terms. A new debt consolidation loan typically requires a good credit score to qualify for favorable rates. It is possible to obtain a debt consolidation loan even if you have terrible credit, but your rates will probably be higher, and your repayment time may be longer. Having enough income to cover the new debt consolidation loan payment comfortably is important. Missing payments on a consolidation loan might harm your credit and result in further costs.

If you are concerned about having enough cash flow to manage the new debt payment, consider working with a knowledgeable associate at Symple Lending. They can help you create a budget and plan for your desired projects.

How Can I Get a Debt Consolidation Loan?

Before applying, it’s important to have a clear picture of your current debt. Use a debt consolidation calculator to get estimates of your total debt, monthly payment and interest rate. Once you know these numbers, you can compare loan terms and choose the one that saves the most money. A debt consolidation loan often requires a strong debt-to-income ratio, a stable income, and good credit. However, getting a debt consolidation loan while having negative credit is still feasible. Some lenders offer personal loans with rates for borrowers with fair or low credit. In contrast, others feature preapproval forms on their websites that let you know if you’ll likely be approved without a thorough credit investigation.

Suppose you don’t qualify for a debt consolidation loan. In that case, there are other ways to make it easier to manage your debt, including by reducing interest rates, effectively budgeting for payments and increasing your income. Still, a debt consolidation loan can help you get on top of your balances and pay them off more quickly, so consider this option if it makes sense.