The Application Process
When you feel that credit card payments or loan payments have become too overwhelming, it may be time to consider applying for a debt consolidation loan. A debt consolidation loan can provide you with access to extra cash to make life more manageable. The loan also works to consolidate all of your existing debts into a single loan so that you can lower your interest rate and stay organized as you try to pay off your debt.
Preparing for the Application Process
Before you choose a lender and apply for a debt consolidation loan, you should take time to do your research on the lender. Online comparison tools can help you to compare rates for debt consolidation loans so that you find the loans with the best rates.
Prepare Your Paperwork
You can also save yourself time by preparing your paperwork before meeting with a lender. You should check all of your credit reports so that you understand the current status or your credit score and history. If you notice any errors on the report, you should take active steps to correct these errors. Credit report errors may cause your credit score to decrease. You should also analyze any other errors on your report and be prepared to explain them to a lender. If you have too many errors on your credit report, then a lender may deny your application for a debt consolidation loan.
You should also gather your bills, budget and paychecks indicating your income. The lender will likely ask you for this information. You may need to verify your current income before you qualify for a debt consolidation loan. Home loans and auto loans typically are not consolidated into a single loan.
Apply for the Loan
When you have all of your paperwork ready, you will be ready to apply for a debt consolidation loan. You may now apply for a loan on the Internet, telephone or in person. Certain websites can even help you determine whether you are pre-approved for a debt consolidation loan. Becoming pre-approved for a loan can help you save time in applying for loans from a variety of lenders.
Once you submit paperwork to a lender, the lender will determine whether you qualify for the loan. He or she will analyze your income, credit history and ability to make payments on time. Some services make it a point to provide you with an approval or denial within 24 hours, while other services may take a few days to get back to you.
Discussing the Terms of Your Loan
If you are approved for the loan, you should discuss the terms of the loan with your lender. You should understand any fees that may be attached to the loan. The lender should discuss the payment schedule with you, and you should also know how interest accrues on the loan. Interest may increase the overall cost of the loan for you.