Consumers usually take out consolidation loans to pay off multiple debts, usually in the form of credit card debt. By having one large monthly bill due instead of multiple smaller payments, you should save money. This is because your debt consolidation loan should have a lower interest rate than your credit card interest. But how do you find consolidation loans with low interest rates?
Finding Consolidation Loans with Low Interest Rates
Interest rates for debt consolidation loans can vary. There are many advantages and disadvantages, however, as many companies offer debt consolidation loans with higher interest rates and hidden fees and charges.. Finding consolidation loans with low interest rates can be difficult, but lenders favor those with good credit. Your credit history and score come into play when searching for a worthwhile loan.
How to Get a Debt Consolidation Loan
The first step towards consolidating debt is going directly to your own bank and talking with a representative about your financial situation. Try to calmly push them to give you the very best rates that you can get. Discuss any improvements in your financial history, such as efforts to raise your credit score or completions of financial literacy programs.
However, before you accept any offer, shop around. Check out other local, national, and online banks. Credit unions often have better interest rates than national banks. When searching for online lenders, make sure to stick with reputable sites.
Also review your credit report for accuracy. Any mistakes on your credit report can result in a higher interest rate on your loan. Dispute any errors with the credit reporting agencies.
Because lenders favor borrowers with good credit scores, and you are likely carrying a lot of debt, you may not have the best credit score. If you have a poor credit score, it can be difficult to qualify for a consolidation loan with reasonable interest rates. And, securing a lower interest rate than your current debt load is the key to a beneficial consolidation loan. Otherwise, you could end up in more financial trouble than before. So, take steps to improve your credit score to improve your chances of qualifying for a lower interest rate loan. Some ways to boost your score include making payments on time, paying monthly balances in full (or at least making the minimum payment), and not signing up for new credit cards.
Alternative Debt Management Options
If you don’t want to take out a loan for getting out of credit card debt, you do have other options! Namely, you can enroll in a debt management plan, or DMP, with American Consumer Credit Counseling! We are a nonprofit credit counseling agency that can help you manage your monthly payments and get better rates for your debts. And, with ACCC there’s no need to take out an additional, risky loan. Instead, we help you consolidate and manage your existing debts.
Although some people try to handle consumer debt on their own, it’s very difficult to change their financial habits by themselves. That’s why ACCC is here to help you with your financial goals and steer you in the right direction!
For more information and help managing your finances, schedule a free credit counseling session with us today.