With interest rates still relatively low, many people are looking to consolidate their debts into one lower-cost payment. Before choosing a debt consolidation loan, it is important to examine a variety of factors in an effort to determine which program is best for you. Here are five tips to consider when looking for the best consolidation loan for your personal needs:
LOAN TYPE: The first thing that needs to be determined is what loan type is best-suited for your needs. Secured loans require that you put up collateral such as your home or car. Although the credit requirements for a secured loan are not as strict, you need to decide if it is worth the risk to put something so valuable to you on the line. Unsecured loans do not require collateral but will generally come with a higher interest rate.
KNOW YOUR NUMBERS: Before you start the application process, it is crucial that you have a clear idea of your financial picture. Add up the amount of money owed on the debts that you would like to consolidate so that you can begin the process with all the information that you need.
UNDERSTAND YOUR CREDIT RATING: In addition to the amount owed, borrowers need to understand their credit rating and how that will inevitably affect the type of loans they are offered. By checking both your credit report and your credit score, you will have a good idea about where you stand so that you will enter the process with more negotiating power.
CHOOSE THE RIGHT LENDER: Every lender comes with a different set of offerings and requirements. Savvy applicants will shop around to find the lender that is the best fit for their debt consolidation needs. Be sure to examine all of the minute details including interest rates and loan terms to ensure that you understand what you are signing.
MAKE YOUR LIST AND CHECK IT TWICE: A comprehensive checklist will serve as a useful guide as you make your way through the lengthy and complicated process of applying for the loan. Creating a checklist will guarantee that no detail falls through the cracks and that the application process will not be derailed because of inattention to detail.