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WHAT ARE DEBT CONSOLIDATION LOANS
Sometimes, the number of small loans can grow. Then we realize we have too many, and it's difficult to manage them. At that moment, a debt consolidation loan can be the smartest option. Why? Loan costs are reduced, either by interest or by service costs. By consolidating debts into a single loan, you can save money and decrease the burden of payments you need to make. Here's what you need to know.
How Does a Debt Consolidation Loan Work?
In practice, loan consolidation means the borrower signs a new loan with new terms and interest rates, unifying all previous small loans into one consolidation loan.
Moreover, in some cases, it is the loan service provider who takes care of paying off the previous loans and consolidating them into one.
By unifying debts, the borrower only has to pay one new loan that replaces the previous loans.
By combining small and costly loans into one, significant sums of money can be saved because all entities have a fixed component in their costs. For example, if you have 3 loans with 3 different entities (1 bank and 2 credit cards, for instance), and each charges you a fixed cost of 10, then you will have to pay 30. If you consolidate the 3 debts into 1, the cost obviously drops from 30 to 10.
Additionally, managing only one loan is much simpler than handling 3, 6, or 9 loans. One due date, money saved on lower administration costs—consolidating debts is a good solution.
How to Combine Loans
Do you have multiple loans with due dates at different times? Do you also find tracking the annual interest rate tedious due to the large number of different payments? Do you feel you might not have enough money to make it to the end of the month?
The popularity of debt consolidation loans has grown considerably in recent years, although some people mistakenly believe that this type of loan doesn't help in overcoming financial difficulties.
However, managing a larger loan is undoubtedly much easier and more economical since you only have to manage the interest and expenses of one loan. A single loan makes budgeting for the month easier, improving your financial situation almost instantly.
The first step in the loan consolidation process is finding the right service provider. In our list of financial entities, you can find several institutions that offer this type of loan. If you need assistance, check the contact form at the bottom of the page and send us your information so we can help you.
After selecting the most suitable service and accepting the offer, the new loan service usually handles the cancellation of previous credits. However, this can vary depending on the service.
5 Steps to Apply for a Loan Online
Choose the most convenient lender for your needs. The first step is to compare and analyze the offer from each provider and determine which is the best option in terms of interest rates, loan amount, loan purpose, etc. Our comparator provides the most comprehensive and updated information on the main entities offering online loans.
Enter your personal information. To obtain an online loan from the chosen credit entity, you will need to provide your personal information (ID or passport) and your contact details. This way, the credit entity will conduct checks regarding your situation to evaluate your application.
Select the loan amount and repayment term. You must choose the amount of money you need and the repayment term (the amount of time). Based on these choices, the credit entity will inform you of the installment amounts, including the interest rate you’ll pay upon receiving the loan. Generally, lenders verify your credit history with credit bureaus to ensure that your credit situation aligns with their risk policy. For this reason, step 1 is crucial (choosing the right entity).
Enter your bank details. Most online loans require you to be the account holder of a checking or savings account, where the loan amount you requested will be transferred.
Receive the money in your bank account. Once the credit entity verifies your information and evaluates your credit request, you will be informed via text message or email if your application has been approved. Once the loan is approved, you will receive the requested amount within approximately 24 hours.
At this point, you will be able to use the money and must repay it within the time frame detailed in the contract. If you want to cultivate a good relationship with the lending entity and secure additional loans in the future, it's important to comply with the payment terms and amounts.
Reasons to Apply for an Online Loan
Applying for a 100% online loan doesn’t require paperwork, phone calls, or office visits. You can apply from your computer or mobile phone and easily choose what you want. It is typically transferred directly to a savings account you selected during the online application. What are the benefits of online loans?
Most do not require a credit report from risk rating agencies.
The entire online loan process is 100% digital and simple.
You sign all documents electronically from your phone.
Competitive market interest rates.
You do not need co-signers or references.
You have digital life insurance that protects you and your family (which repays the loan immediately).
You can securely pay your monthly installment on the website.
You can choose your loan term.
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