Finding the Best Debt Consolidation Loan

Debt consolidation loan is a single loan that will take care of all your remaining small to big loans. These are offered by various debt consolidation companies, peers, online lenders and various other sources. It is very convenient to replace your all loans with a single cumulative goal but it should not be at the cost of any compromise made on rates on interest or agreeing to terms and conditions of the debt consolidation company.  So you must consider various factors in mind before you find the best debt consolidation loan option for yourself. In this article, we try to find out such factors that are useful in determining and finding the best debt consolidation loan for you. Here they are:

#1 Secured vs. unsecured loans

A debt consolidation loan can be a secured or an unsecured loan. An unsecured loan can be against properties like a house. There are options like a home equity line of credit which is an unsecured loan method where your house is kept as surety in case you fail to do repayment. In case you are sure you can do fine with the repayments then an unsecured loan is an option to consider as it comes with lesser rates of interests.

#2 Credit score

There are many companies that will give a better rate of interests if you have a decent credit score.  You should not make any hush and compromise on less interest rate if you have a good credit score.  Basically, any lender would like to have faith in you before he gives you money. A good credit score can be kept by paying bills on time, not delaying on any premiums or instalments which are already on your card. It is true that you can a loan without a good credit score too but with poor credit score your chances of getting good interest rate go down.

debt consolidation

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#3 Traditional and non- traditional options

A debt consolidation loan can be obtained from traditional banks, online lenders, credit unions, peer to peer and so on. Every lender whether traditional banks or non-traditional companies have their own advantages and disadvantages and its worthwhile understanding which method is right for you. Traditional methods may offer safe and good interest rates but are too tedious sometimes and require the good credit score, solid business plan and all your accounts in place. On the other hand, if you don’t want to wait too much, avoid the paperwork and go little easy and quick then you can go for non-traditional methods. There are so many online lenders available and you can compare their interest rates. The advantage of online lenders is that it is reachable everywhere and you can get started easily with more access to resources. Some debt lending companies lack penetration in all parts of the countries and that is where the online lenders can be useful. Further, the amount of time in which you start getting money in hand is fast and quick capital in hand is useful in many circumstances where you are in dire need of money.

#4 Loan amount and period

Finding the best consolidation loan is not a rocket science. It’s all about narrowing down your choices for best lenders based on various factors. Loan amount and loan tenure are two such very important factors. Depending on loan amount and tenure various companies change their interest and APR rates. If you have a small loan but you wish to repay it in a longer tenure then you can find the companies who lend money with long repayment options and fewer rates. Make sure to check the late payment fees for any company you choose. Although late payment is something you would never want to do, knowing how much damage it can do to you will always keep you on toes.

Thus as we read above the path to finding the best debt consolidation road consists of knowing and understanding the factors like how much money you need, how long you wish to carry the loan, what type of loan you are willing to take and so on. Sometimes you can also take help of financial advisors from various forums or even paid ones to help you narrow down your options.

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