What is a consolidation loan?
A debt consolidation loan is generally a loan from a financial institution that lets you repay several or all of your creditors through a single payment. You only have to repay one loan, to your financial institution. As well as letting you streamline your debts with a single, regular payment, a consolidation loan can give you a lower interest rate than those of your creditors, which saves you money on interest.
When is a consolidation loan a good debt solution?
A debt consolidation loan can be a particularly attractive option if you have unpaid debts at high interest rates (such as with credit cards or retail store cards). In most cases the financial institution will settle all your debts for you, and in return you will make a single monthly payment to the institution.
Debt consolidation can be appropriate for certain debts such as your credit card balance or other consumer loans. However, not all debts can be grouped into a consolidation loan. Mortgages, for example, cannot be included. Your bank can tell you exactly which of your debts you can include when it grants you the loan.
To qualify for a consolidation loan, consumers must have an acceptable credit rating as well as sufficient income to show that they are able to manage it (meaning they must demonstrate their ability to make monthly consolidation loan payments as well as pay their regular expenses and monthly bills).
You can ask at a bank or other financial institution about the possibility of consolidating your debts by taking out a single loan. In such a case the bank or financial institution will settle all your debts for you, and in return you will make a single monthly payment to this institution. It is important to stop making purchases on credit. If you don’t you may never settle your debt.
If your financial situation prevents you from getting a consolidation loan from a reputable bank or institution, Poupart Trustee may offer you an alternative where you would have an excellent chance of being accepted, the consumer proposal.
This solution will allow you to consolidate all your debts into one monthly payment determined according to your current budget, to reduce the total amount of your debt by up to 70% and to finance everything at a 0% interest rate.
Click here to learn more about the consumer proposal.