A debt consolidation loan is a loan you obtain from your bank to pay all of your individual unsecured creditors in full. This allows you to make one single monthly payment to your bank rather than several separate monthly payments to your individual unsecured creditors. The interest rate offered on a consolidation loan is usually less than the interest rate offered by your individual unsecured creditors.
Your ability to qualify for a consolidation loan will depend on your overall credit rating, your personal relationship with your bank, the amount of your total debt, both secured and unsecured, and your annual income. Qualification for a consolidation loan may also require your pledging an asset, such as your motor vehicle or your residence, as security for the loan.
A debt consolidation loan is a good option if you are able to qualify for the loan, have the monthly income to afford the monthly loan payments and have the discipline not to incur any further debt until the consolidation loan is repaid in full.
Call Faber Inc. in Edmonton today to discuss the merits of a debt consolidation loan and to learn more about other debt restructuring plans. If you are unable to qualify for a debt consolidation loan, we can explore your available options with you.