Debt consolidation lenders are the people or institutions you approach when you are considering taking a debt consolidation loan. Different lenders have different rates, and offer diverse services and debt management options.
It is important to locate the right lender, and also to find out how they work. Most lenders hand you a detailed loan application when you first approach them. The form has several fields, most of which are targeted at your personal finances. You are required to provide detailed information on all your debts, account numbers etc. The lenders also want you to submit previous years’ tax returns as well as recent check stubs.
This is not all. All lenders grill you on your living and spending patterns, which may not be pleasant, but has to be suffered. You are also required to explain as to how and why you fell into the debt cycle, and perhaps even assure that it won’t be repeated.
After confirming your credit history and income sources, the lenders put forth a proposal giving details of the terms and conditions of the debt consolidation loan. The offer also specifies the amount of loans, the period over which repayment will be made and the guarantees that you are expected to give.
It is now for you to accept or decline the proposal. While doing so, you must keep in mind your financial situation and evaluate the different offers in order to make the best choice. The things that you need to keep in mind are: the interest rate, monthly payment, and length of the loan term. You must also clarify the number of points (if any) the lender expects you to pay. Points are basically an up-front, one-time payment to the lender and each point is 1% of the debt consolidation loan amount.
When you consider a lender, always make sure that the lender understands your business and provides you a loan package that’s right for you and your finances. Beware of lenders who may charge a heavy deposit or orientation fee. Avoid submitting multiple applications and do not apply for additional loans when approaching a debt consolidation lender.
Another viable option when seeking a debt consolidation loan is to go through online lenders. This is especially convenient for people who have a bad credit history because online lenders usually accept such customers too. However, do confirm the authenticity of the website you are visiting and make sure you don’t end up paying a heavy fee to the lender.
Whether online or face-to-face, research is most essential when you are seeking out a debt consolidation lender.