If you’re struggling under a mountain of debt, you may have already convinced yourself that you could never qualify for a personal loan. Well, think again. Although credit scores, income and debt-to-income ratios are certainly considered when candidates apply for personal loans, it may be easier than you think to receive a loan that could help improve your financial situation by shrinking that mountain. Here’s a look at what lenders are looking for when making personal loan decisions.

What Lenders Look For

Not surprisingly, the first thing that lenders look at when deciding whether to offer someone a personal loan is their credit history. This is the detailed report that shows how you have managed credit and payments over the years. Associated with the credit history is your credit score, which is usually between 300 and 850; the higher the score, the lower the risk for lenders. But even if you have a lower number, that doesn’t mean a loan is impossible.

Lenders also consider your ability to make payments — namely, your income and employment history. They look at your current debts and create what is known as a debt-to-income ratio. If your personal loan is secured with collateral, the lenders evaluate the value and equity of the collateral. Often, this is your car or home. They may want to know about any savings or assets you have beyond your collateral that could help repay the loan. Finally, they want to know how you plan to spend the loan proceeds.

Credit Scores Impact Terms

Because a personal loan is an installment loan, the debt is less damaging to your credit score than credit card debt. In fact, because a personal loan offers diversity in your credit, it can even improve your credit history. Of course, if you already have years of damage to your credit score, lenders have to consider the future risk.

Overall, when the risk is higher, the terms are less favorable to the consumer. You may have to pay the loan off over fewer years, or perhaps the interest rate would not be as low for someone with worse credit. While the terms are impacted, it is still possible to receive a personal loan as a way to begin rebuilding your credit and find debt relief.

Small Loans Are Still Possible

If you have trouble getting a personal loan by yourself due to a poor credit history, don’t give up hope. There are many options still available. First, you could enlist the help of a co-signer to act as a personal loan co-applicant. If they have a positive credit history, it could boost your chances. Another option is to apply for a smaller personal loan. This presents the lender with less risk and also gives you the opportunity to pay down some of your high-interest credit card debt. If you have collateral, that can also help you get a secured loan. The point is, there are many options that are worth considering as you create a debt management plan for yourself. Personal loans are just one tool you can use to achieve fiscal health.

Ready to learn more about whether you could qualify for a personal loan? Click on Refi.com’s personal loan page to begin the process today.  

Sources:

https://www.thebalance.com/know-about-personal-loans-960025

https://www.finder.com/personal-loan-eligibility

Money owed is money owed, right? Not exactly. Debts can differ dramatically, especially when it comes to which debts can be consolidated and the ways lenders can work to recover what was borrowed. There are two major types of debts: secured debt and unsecured debt. If you understand the difference, you can better understand your financial health as you work your way out of debt and get on the path to a stronger fiscal future. Let’s take an in-depth look at the different kinds of debt so you can make informed decisions as you work to prioritize your repayment process.

In-Depth Look: Secured Debts

If you have a mortgage or an auto loan, you have what is known as secured debt. This is a debt that is connected to an asset that you have, and lenders consider the asset collateral. This is their insurance policy that you will repay the debt. As part of the repayment process, lenders place what is known as a lien on the asset, which gives them the legal right to take it from you — foreclosure on a house, for example — if you fall behind on payments. Until you’ve paid the entire debt in full, you do not really “own” the property.

The trickiest part of secured debt is that even if you fall behind on payments and the lender takes the asset back, you could still owe them more money. That’s because the lender sells the asset — your car, for example — at auction to the highest bidder. If the selling price doesn’t cover what you owe, you are still legally responsible to pay the balance.

In-Depth Look: Unsecured Debts

Meanwhile, an unsecured debt is not tied to anything you own. That means that even if you fall behind on your payments, it would take a lengthy, complex legal proceeding for the lender to take any assets like your car, your home or anything else of value from you. Examples of unsecured debt include credit card debt, medical bills, student loans and many payday loans.

Of course, there are many ways that lenders can try to recover the money owed to them, even without the power of a property lien. Often, they will employ collection companies to harass borrowers who are unable to pay. They may also file lawsuits, and if they win, they may garnish your wages, put a lien on your assets and report the debt to credit bureaus.    

What Debt Qualifies for Consolidation?

For those who are overwhelmed with debt, a common and responsible way to address the stress and repayment process is through what is known as debt consolidation. Debt consolidation is when a borrower works with a financial professional to apply for a loan that can be used to pay off high-interest debt from a variety of sources. That way, you would pay just one payment while addressing a variety of debts and also helping your credit improve.

Both secured and unsecured debt — including credit card debt, medical bills and student loans – can be consolidated. Balance transfers on credit cards, personal loans, home equity loans and other debt consolidation loans can also be consolidated. Want to learn more about the process of debt consolidation? Log on to Refi.com today.

Sources:

https://www.thebalance.com/the-difference-between-secured-and-unsecured-debts-960181

https://www.investopedia.com/ask/answers/110614/what-difference-between-secured-and-unsecured-debts.asp

Are you at the point where you’re too stressed out to check your mail or answer your phone, for fear it’s a collections agent, another bill, or any sort of unpleasant reminder that you are struggling under the weight of debt? You’re not alone. High-interest credit card debts, medical bills, student loans, home equity loans, and many other kinds of debt can stack up quickly, making it difficult to imagine there’s a solution to repair your credit history, pay off your debts in a responsible way and maintain your dignity.

For many, debt consolidation offers a solution. Debt consolidation is the process of working with a financial representative to apply for a cash-out refinance loan designed to cover the debt of high-interest debt so you can pay just one payment and work toward financial stability. Is debt consolidation right for you? Let’s look at the details of the process.

Who Qualifies?

Many borrowers who are having difficulty repaying their debts may assume they won’t qualify for debt consolidation because they have less than perfect credit. However, you may be surprised to learn that some lenders only require a credit score of 500 (although most look for scores around 620 to 640.) This allows a large variety of customers to find a solution to their financial concerns in this manner. This long-term debt strategy can take three to five years to complete, but it will allow you to get out of debt while rebuilding credit with lower interest rates and lower monthly payments.

To determine if you qualify, gather all your bills and your income statements to discuss your current financial situation with a financial professional.

What Debt Can It Cover?

There are two major types of debts: unsecured debt and secured debt. Secured debt is the type of debt where the borrower puts up collateral, like a house or an automobile, as insurance against the debt. Lenders of secured debt place liens on the property and have the right to take it back and sell it if you fall behind. Unsecured debt, like credit card debt, medical bills, student loans and cash advance loans, are not attached to assets. Both unsecured and secured debt qualifies for a debt consolidation process with a cash-out refinance, allowing you to only pay one monthly payment for everything you owe.

Are There Disadvantages?

Overall, if you work with a reputable company, there are substantial benefits to debt consolidation. You can borrow money at a low interest rate to pay off your loans or credit cards, which have higher interest rates. You can also often pay off the debt faster as a result. It’s also good to have fewer payments and, of course, put an end to those stressful calls and walks to the mailbox.

However, there are disadvantages as well. You need to be aware of the exact terms of your new cash-out refinance loan. If you not, you risk paying even more in interest over the life of the loan, possibly sinking you even further into debt. If you choose the wrong company, the process could create even bigger problems.

What Companies Are Reputable?

When you’re considering debt consolidation, do your research on the best companies to work with. Do they have a solid history of good customer service? Are you able to call and talk to a representative, and are they interested in working with you for an overall debt management plan? If a company starts to pressure you to quickly sign up without taking the time to read the terms, take a breath. There are many companies in the market to consider. Make a smart decision to take back control of your finances for the rest of your life.

Ready to learn more about the debt consolidation process? Log on to Refi.com’s debt consolidation page now to connect with a representative who wants you to succeed.

Sources:

https://www.nolo.com/legal-encyclopedia/debt-consolidation-pros-cons.html

https://www.thebalance.com/pros-and-cons-of-debt-consolidation-4159611

Debt Consolidation loans

If you’re looking at debt consolidation loans, chances are your credit isn’t as good as it could be. Does this mean you won’t qualify? Before you lose hope, know that there are many options available to those with bad credit to consolidate their debt and begin efforts to improve their financial health. It can take time and dedication to dig out from maxed-out credit cards, medical bills, student loans, and other mounting debt. Working toward a solution and committing to the process will, over time, help you reach your financial goals and improve your credit. Here are some things to consider when qualifying for debt consolidation loans:

Credit scores are some of the most important numbers attached to your financial status. Having a good credit score can help you get a good interest rate when you borrow money. Good scores can also get you better insurance premiums and better deals when you’re signing up with a new cell phone company or upgrading your cable package. FICO scores range from 300 to 850, and anything below 580 is considered fair or poor. Needless to say, fair or poor scores can cost you a lot.

Everything You Need to Know About Debt Relief

If you’re like so many Americans and have debt, you may feel like you’ll never dig your way out. But relief could be closer than you think. There are many little-known solutions that are available to help consumers get back on track financially and reduce the stressful burden that comes from debt. Learning more about debt relief programs and debt consolidation loans can help you find the answer to your worries once and for all.

Saving_money_debt_consolidation

Bills, bills, bills — if you dread the walk to the mailbox or answering your phone, you may be searching for your own version of a miracle. Debt in the form of high-interest credit cards, student loans, medical bills, and so many other ways causes stress and worry that can take over your life. But there is a solution — debt consolidation loans provide an answer for thousands of individuals who were considering bankruptcy as a way to regain control of their finances.

debt consolidation 101

Money owed is money owed, right? Not exactly. Debts can differ dramatically, especially when it comes to which debts can be consolidated and the ways lenders can work to recover what was borrowed. There are two major types of debts: secured debt and unsecured debt. If you understand the difference, you can better understand your financial health as you work your way out of debt and get on the path to a stronger fiscal future. Let’s take an in-depth look at the different kinds of debt so you can make informed decisions as you work to prioritize your repayment process.

Are you at the point where you’re too stressed out to check your mail or answer your phone, for fear it’s a collections agent, another bill, or any sort of unpleasant reminder that you are struggling under the weight of debt? You’re not alone. High-interest credit card debts, medical bills, student loans, home equity loans, and many other kinds of debt can stack up quickly, making it difficult to imagine there’s a solution to repair your credit history, pay off your debts in a responsible way and maintain your dignity.