Debt Consolidation Loans

Eliminate debt with loan consolidation

Debt consolidation loans are designed to help consumers eliminate debt. These loan products, offered by financial institutions and specialized lenders, let you clear debts to multiple creditors and escape the phone calls, letters and hassles that indebted people face month after month.

What Debts Can I Pay Off Through Loan Consolidation?

The lending financial institution will place restrictions on what you can and cannot use the loan consolidation money for. These restrictions are non-negotiable, and agreeing to them is a precondition of being approved for debt consolidation loans.

Generally, you can use these loans for consumer debt, including credit card debt, as well as utility bills and personal loans and lines of credit. You will not be able to use debt consolidation loans to pay off your mortgage, and many lenders disqualify car loans from eligibility, as well.

Some financial institutions offer specialized loan types, such as credit card debt consolidation loans and personal loan debt consolidation. These financial products typically have additional usage restrictions in place.

The key advantage of using this strategy to eliminate debt is that you pay off all your creditors and merge all your outstanding debts into a single loan. Typically, debt consolidation loans have a more favorable interest rate, and your monthly payments may be lowered, thanks to an extended amortization period.

Do I Qualify for Debt Consolidation Loans?

Eligibility for debt consolidation loans is usually tied to your income. You'll have to prove that you have a regular and reliable source of income and that you make enough money to cover your monthly loan payments without spreading your financial resources too thin.

The one catch-22 of debt consolidation loans is that you'll have to have an acceptable credit rating to qualify for one. This can be a problem, because unmanageable debt sends your credit rating plummeting, and it may reach a point so low that you no longer qualify for loan consolidation. Thus, it's essential to act fast if you're struggling to keep your head above water with creditors.

If your credit rating is already dangerously low, debt counseling can help. Debt counselors educate consumers and work with their clients' creditors to improve the situation for all parties, and there is usually little or no fee for their services.

Debt consolidation loans offer a workable solution to financial problems. If you're saddled with debt that's beginning to affect your credit rating, talk to your financial institution about your options.