Just like anybody, you too may know that credit card debts are the high-interest loans. Most people have multiple credit cards from multiple issuers and use them at several instances, all of which may not be logical enough for proper reasoning. Therefore, it is easy and very common that people will have multiple credit card debts at any given point of time. Each of these debts carrying high interest will make the repayment aspect a bit confusing, complicated and even impossible at times.
If you too experience such a situation, you may have to seriously consider taking out a personal loan to consolidate these high-interest debts. Just like the credit cards, personal loans are also offered by several banks and credit unions. Using these personal loans prudently you can either consolidate or refinance your debt transforming it into a loan of lower interest and with a single fixed monthly payment.
There are several benefits of taking out a personal loan from a bank to consolidate your multiple credit card debts making a viable option but there are a few disadvantages of it as well that you should not overlook. Few specific types of personal loans may carry higher interest rates as compared to any traditional mortgage or auto loan.
It is therefore required for you to know the best ways to increase your chances to get fast approval of your application, should you decide to pursue a personal loan for debt consolidation.
Type and amount of loan
First, you will need to decide on the loan type you want to be given the fact that there are primarily two main types of personal loans namely, secured and unsecured.
- Secured loans are those for which you will need to pledge collateral security to get approved. This collateral security can be your car or your house and this collateral can be possessed by the lender in case you default in making your payment. However, the fact that you have to put up collateral for it, these secured loans usually have flexible and looser requirements for eligibility such as a low credit score, greater borrowing capacity, and a lower rate of interest.
- Unsecured loans, on the other hand, do not require any collateral to avail. Ideally, the loan providers based on your ability to repay and creditworthiness to grant you such loans. Therefore, you will need a higher credit score to get approved and get a higher interest rate than secured loans.
To get fast approval to be sure about the loan type you may be eligible for before you apply.
The amount of money you want to borrow will also influence your loan approval process and speed. You must know how much to borrow before you apply for a personal loan. For this, you will first need to tally up the amount of the existing debts that you want to refinance or consolidate. Knowing your amount and personal loan requirements will help you avoid asking your lender for an exaggeratedly high amount.
Procrastination and credit
When you want to deal with your debt you will need to act fast. Procrastination will not only make things complicated with regards to your debt but will also make your financial future bleak. It will also make things harder when it comes to processing your personal loan application down the line. You may even lose your confidence in taking it out and in your ability to pay it back.
You must also know your credit before you apply for a personal loan so that you are sure to get fast and positive approval. The state of your credit will matter most significantly in the approval process of your personal loan application. Ideally, it is recommended to check both your credit report as well as your credit score from the credit bureaus at least once a year. When you check your credit score make sure you:
- Check it with all three credit bureaus for free
- Closely examine the report for any negative or improper information that may hurt your chances of loan approval
- Dispute any errors you find in your report and have it removed from the credit report and
- Get two of your updated credit scores for free.
Before you apply for your personal loan make sure that you do everything possible to improve your credit score if you find it to be too low for fast approval.
However, you may also take help from Nationaldebtrelief.com if you are in ominous need of debt relief and do not have any time to wait for your credit score to improve.
Find a suitable lender
Your choice of the personal loan provider will also influence your loan approval process. Therefore, research well to know who you should apply for a personal loan in the first place because all financial institutions are not created equal. Remember a few points to follow when you research search as:
- Shop around for several lenders to compare loan terms, amount, rate, and quality of service
- Do not only rely on and resort to banks but look for other credit unions as well
- Know the requirements of each and choose the one that needs minimal documents and is most likely to approve your loan application
- Do not finalize at the first offer
- Review the fine prints and consider all other options.
Lastly, create a checklist once you are ready to go ahead with your personal loan application. Include all the documentation that you will need to provide the loan provider. You may also have to meet your creditors as well as your employer and other people to collect all the documents required. Therefore, devote some time to know about the requirements and make sure that the documents are complete in all respects and authentic.
Remember, incomplete applications may result in an immediate rejection. Lastly, before you apply to remember that debt consolidation will make sense only in certain scenarios. Therefore, understand the total cost of the personal loan to the current debts to make it the right choice for you.