Debt can be a very challenging issue for a person to climb out of without assistance. Too often, people don’t know exactly what it takes to get back on track and handle finances responsibly.
The one option that people have used successfully is a debt consolidation loan. Dutton Lending is one company that offers debt consolidation loans, and they feel they are still under-utilized by the general public.
This comes down to a general lack of knowledge regarding debt consolidation loans. Knowing exactly how they work and how easy they are to obtain can encourage people to go down this road.
What is the Basic Definition of a Debt Consolidation Loan?
A debt consolidation loan offers a person a loan in the amount of all existing debt. The funds can pay off balances and create a single new loan if approved.
What are the Benefits of a Debt Consolidation Loan?
People who’ve successfully used a debt consolidation loan feel it’s the best option to handle finances responsibly. Plenty of benefits make a real difference.
Quicker Handling of Debt
A minimum payment on a credit card can stretch out a repayment plan for a very long time. Debt consolidation loans speed the process up. It keeps the average person on a faster plan toward a debt-free life.
Lower Amounts of Interest
Applicants usually find that they can get a lower rate than the debt they currently deal with. Averages show that credit card interest rates can be 5% to 10% more than a typical personal loan rate.
Easier to Monitor
It’s always going to be easier to make one monthly payment than to jump around and pay every debt little by little. All it takes is visiting one website to make one payment. Even easier, there are auto repayment plans.
What are the Risks of a Debt Consolidation Loan?
While many people can benefit from a debt consolidation loan, there are some risks people need to know beforehand. It’s not a perfect solution, especially if a person lacks responsibility.
Additional Upfront Cost
A lot of debt consolidation loans come with different fees in the beginning. Dutton Lending keeps fees down more than most, but it’s still worth considering on top of the annual percentage rate.
Interest Rates Aren’t Always Lower
Most people will notice that they can get a lower interest rate with a debt consolidation loan. However, that’s never a guarantee, as there are a lot of factors that go into an interest rate.
For example, someone with a poor credit score might not be able to get a low-interest rate with a debt consolidation loan. Maybe they already have a decent interest rate with their debt since they applied at another time in their life.
Some debt comes from low-interest rates in the first place. For example, student interest debt can sometimes be very low with the interest rates. No personal loan is going to be able to match that.
Applying for a Debt Consolidation Loan
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The beauty of online lenders like Dutton Lending is that applying for a consolidation loan is easier than ever. It can take a very short amount of time to get the ball rolling and have everything set up properly.
Once the application process is over, it takes little time for them to make a decision. The money can be in a person’s account in a matter of days. After that, it’s just a matter of making timely payments to start paying off the loan.
Dutton Lending has shown time and time again that they can work with a client and find the best option for them. Being a one-stop shop can give many the peace of mind they need to feel confident that they can get out of debt once and for all.
To speed the process up, look into getting all the application information necessary so that it can be done in one sitting. Also, look into pre-qualification, as it gives people an idea of how much money they will receive. That usually involves a soft credit pull only, so a credit score won’t be affected if the debt consolidation loan is smaller than one expects.
Keep in mind during the application process, lenders will consider credit score, debt-to-income ratio, and income. If one of these areas is lacking, most will still be able to find a quality deck consolidation loan. If two or more of these areas are lacking, there could be problems qualifying for anything good.
Is a Debt Consolidation Loan Actually Worth It?
There’s no definitive answer for the consolidation loan. A good amount of people will find it to be worth it since they are essentially lowering their interest rate monthly. It’s much easier to make only one payment per month instead of jumping around.
Those with bad credit might find getting a quality debt consolidation loan more challenging. Working on credit a bit first and then re-applying for a debt consolidation loan might be the best way to go.
With any questions or concerns about debt consolidation loans, Dutton Lending can provide valuable information. Dutton Lending loves answering questions and helping out clients even before they take a loan with them. More informed customers will feel confident in their eventual decision.