Debt can be overpowering, primarily if you make multiple payments through different cards. In this case, a debt consolidation loan can make your debt more manageable by merging all your balances into one personal loan with one payment per month.
When getting a debt consolidation loan, ensure you go through all the steps to get the best rates and avoid missing payments. Here’s a step-by-step guide to help you understand better.
1. Keep A Check On Your Credit Score
It’s best to check your credit score before diving into your credit applications. It will give you an accurate picture of what kinds of loans you will be qualified for.
2. Have A Good Look At Your Credit Report
Go through your credit card report thoroughly. It will improve your credit score and will assist you in getting the best loan. Make sure you point out all the errors so that they are fixed before you apply for your debt consolidation report.
3. Maintain A List Of Monthly Payments & Debts
Once you fix all your errors and have your credit report ready, know that it’s time to calculate all the debts and monthly payments. It will include your loans, all debts, or credit cards. Additionally, it will help you open up various loan options you can choose from.
4. Know Your Loan Options
With a clear picture of your credit score, you will know what debt consolidation loans you will apply for. However, you must consider all your options, such as credit unions, traditional banks, and online lenders.
Moreover, you must also pay attention to features such as the loan fees, minimum credit score you need for a personal loan, interest rates, repayment terms, etc. Ensure that you choose one with the lowest APR. Lastly, pay attention to any other fees associated with the loan.
5. Make Use Of A Debt Consolidator Calculator
To make things easy, you can use a debt consolidator calculator to estimate what your monthly payments are and what your repayment schedule would look like. It will give you an indication of how long the interest rate payments will go. It will show you if you can afford this and whether a debt consolidator loan is right for you.
6. Apply For Debt Consolidation Loans
Once you are done listing down and choosing a list of three to four lenders offering you what you need in a debt consolidation loan, it is time for you to start applying. When you apply with multiple lenders, you will know who offers you the best rates. However, you need to do this soon so you don’t waste time.
7. Close The Loan & Set Up Automatic Monthly Loans
Once approved for a debt consolidation loan, you can close the loan. The lender might pay off all your debts or credit the loan sum in your account. Setting up automatic monthly payments will help you stay updated with payment dates.
Now that the step-by-step process has been broken down for you, you’ll be better able to apply for a debt consolidation loan.