Struggling To Pay Off Debt: Apply For A Debt Consolidation Loan

April 13, 2018

A finance company, credit union, or bank can provide you with the cash you need to pay off outstanding debts by consolidating or bringing them all together to form one loan. This is a simple way of defining debt consolidation loan.

People typically apply for consolidation loans when they have difficulties making minimum monthly payments. Getting this type of loan offers numerous benefits and there are certain requirements that are considered.

How Debt Consolidation Works

A debt consolidation can be used to pay off debts since the lender loans you money for the purpose of paying off existing debt and facilitating access to the money that you need. If you qualify for a debt consolidation loan, the money will be provided to pay off a credit card debt settlement, for example. After closing the credit card accounts, a single monthly payment is made to the lender for the amount that has been borrowed.

It is important to have a practical budget that you use to avoid a situation where you make loan payments for a few months and end up struggling again for new credit. If this happens, you may end up increasing your debt instead of using a consolidation loan to pay it off.

Advantages Of Consolidating Debt

Debt consolidation loans are linked to the main advantage of effectively paying off your current debt. This is helpful when you have been struggling with overdrafts on bank accounts, household bills, and credit cards. An unsecured debt consolidation loan eases the pressure of paying several bills every month, including the ones that are past due.

  • Your focus will be solely on one monthly payment.
  • You usually consolidate at lower interest rates and save money.
  • Debt is paid off within a set period of time that may range from 2-5 years.
  • Fees are not usually applicable, depending on who borrow the money from.

Identifying the best debt consolidation program or loan ultimately depends on your situation. Debt repayment programs and loans function in different ways. A loan enables you to borrow money and pay off debt. This is followed by paying off the loan along with interest. A repayment program involves using the money in a budget to pay off debts without being lent more money.

Interest Rates

Lenders often offer competitive interest rates for debt consolidation loans. Various factors can increase your chances of getting better interest rates. These include your ability to offer good collateral or security for a loan, your relationship with the financial institution, net worth, income, and credit score. Interest rates for loans are generally determined by specific circumstances. Visit for more information.

Qualifying For Debt Consolidation

A qualification process influences your ability to get a debt consolidation loan. Lenders do often have various rules and stipulations that you have to adhere to in order to qualify, but you can check your eligibility before you apply by completing a consolidation loan calculator. A loan calculator will give you an indicative look at what you can borrow, and the likely interest rates and monthly payments, but for more information, here are a few of the usual requirements for qualifying for consolidation loan:

  • Credit score that fulfills the minimum requirements of the lender. This typically means no large negative notes on the credit report or several late payments.
  • Earning enough income.
  • Reasonable monthly minimum payments.
  • Offering good security for the loan.
  • If you are unable to meet the requirements, you might still qualify if you have a co-signer.

Key Considerations

Debt consolidation allows you to take out a new loan and pay off various consumer debts and liabilities. Multiple debts can be combined into one bigger piece of debt that often comes with better pay-off terms like a lower monthly payment, lower interest rate or both. Consumers have the option of using debt consolidation as an effective tool to handle credit card debt, student loan debt and other debts.

  • There are different ways for consumers to lump debts into one payment. They can consolidate credit card payments by using a single new credit card, which is a beneficial strategy if the card charges minimal or no interest within a period of time. They can also use the balance transfer feature of an existing credit card, especially when a special promotion is being offered on the transaction.
  • Debt consolidation is generally any approach that uses a type of financing that can practically pay off debts. There are certain debt consolidation loans that creditors offer as part of the plan for borrowers who have trouble managing the size or number of outstanding debts.
  • Creditors may be willing to do this for a variety of reasons, including maximizing the possibilities of collecting from debtors. The loans are usually provided by various financial institutions that include credit unions and banks. Debt consolidation companies also offer this service.


Some people may be unsure about the most effective way to consolidate their credit card debt according to their situation or how a debt consolidation actually works. It is advisable to get I touch with a credit specialist for expert guidance and advice regarding consolidation loans and options. This is an important step towards finding the best solution in a timely manner. Regardless of how complex your situation may appear to be, you will be given the information you need to determine a viable solution.

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Andi Perullo de Ledesma

I am Andi Perullo de Ledesma, a Chinese Medicine Doctor and Travel Photojournalist in Charlotte, NC. I am also wife to Lucas and mother to Joaquín. Follow us as we explore life and the world one beautiful adventure at a time.

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