Lending Criteria for Consolidation Loans

A secured loan is one option for borrowers, and they are usually offered a lower interest rate and a longer repayment term. Depending on the type of loan, some form of security or a co-signer may be required. Another option is to consolidate high interest credit cards to avoid interest charges. Financial institutions offer various low interest, no annual fee, and other credit cards with introductory periods.  Canadian debt consolidation is one option for borrowers with excessive debt. It is crucial to make timely payments because late or missed payments will affect your credit score. Applying for a balance transfer credit card is one way to reduce the total payment amount. This is one way to deal with excessive debt and learn how to budget. Before you choose a method, ask for any government charges and lender fees, including exit fees, loan application fees, taxes, duties, and others. You may want to apply for a loan with a competitive fixed interest rate.

Requirements and Criteria

CreditCreditworthy applicants are offered better deals than borrowers with fair credit. Banks want to make sure that applicants are able to meet their monthly payment. A missed or late payment often means a higher interest rate. List all sources of income, including additional sources such as alimony, child support, public assistance benefits, life insurance proceeds, and others. Financial institutions look at factors such as the applicant’s overall stability, employment history and earnings, payment history, and whether collateral is offered. One option is to apply for a home equity loan and use your equity as collateral. Your payment history is also an important factor, and missed or late payments are a red signal for financial institutions.

How to Apply

Before you apply, make a list of your debts, including auto, student, and personal loans and credit cards. Look at your monthly payments, interest charges, prepayment penalties, penalty interest, etc. The requirements vary from lender to lender but it pays to know your options. Then you can approach different lenders or use the services of a professional. There are different options to consider, including revolving and installment credit. Many creditors will be willing to cooperate if you are in danger of bankruptcy.

Other Ways to Deal with Excessive Debt

Overburdened debtors can choose from different options, including individual voluntary arrangement and consumer proposal. Declaring bankruptcy is a last resort. A formal proposal to your creditors is one alternative whereby payments are distributed to different loan providers.