Tips to Get Approved for Debt Consolidation Loans in North York

Debt consolidation loans in North York can be one of the best ways to streamline 
numerous debts and make your monthly payments more manageable. However, it’s not 
very easy to obtain a loan nowadays. You can’t just walk in a bank or a finance company 
and expect them to lend you the amount you need just because you ask. Lenders these 
days are very careful who they grant a loan to and want to be very sure that they will be 
paid back the money owed them.

So how do you figure out if you qualify for a debt consolidation loan and increase your 
chances for approval? Here are some tips:

Figure out how much you need to borrow

This is an important first step to do, so that you can have a clear picture of what amount 
you can exactly afford to borrow. Calculate all the debts that you wish to consolidate. Next,

work 

out a budget to determine how much monthly payment you are able to make towards the 
consolidation loan. Once you’ve looked over your existing debts and have an approximate 

number for your monthly payment, decide on the exact amount you have to borrow. Keep 
that number in mind when applying for a personal loan to avoid borrowing a higher amount 
which you won’t need or can't even afford to pay back.

Choose the right type of loan to make

There are two main types of consolidation loans that you can make, a secured consolidation 

loan and unsecured consolidation loan. With secured loans, you will need to put up collateral 

as security for repayment of the loan. Most commonly, lenders ask for real estate property 

such as your home or other valuable asset you own, such as your car or art, jewelry or 

collectibles or even investment accounts. In this type of loan, you can borrow a higher amount 

and get a lower interest rate even if you have a low credit score because of the security that 

the collateral offers the lender. You lose assets you offer as collateral in the event you default 

on loan payments.With unsecured loans, you do not have to provide any collateral but you will 

need a high credit score to get approved, and you may end up with a higher interest rate than 

a secured loan.

Check the state of your credit  

Lenders will look at both your credit score and credit history. You want to make sure that 

they see a fairly high credit score. The higher your credit score, the more it will help lenders 

to see you as being safe to lend to and that you are able to keep up with payments. If you 

have a very low credit score, lenders will likely reject your loan application. On top of your 

credit score, lenders will also look at your credit history to gauge your credit worthiness, 

whether you have defaulted on a loan, how many times this has happened in your financial 

history and if you have been on any debt repayment program. You need to prepare all your 

credit information before you apply. If there are errors in your credit report, take the steps to 

dispute them so they can be fixed. If you have a low credit score, you need to take action to 

raise it so you can qualify for a loan.

If you are struggling to manage your debts month after month, debt consolidation loans in 

North York can be an option to consider. Although it is important to know that it’s not the only 

option you have. It will really help if you talk to a debt professional like a licensed insolvency 

trustee or a certified credit counselor to find out the best way to consolidate your debts or if 

there is another solution to your financial challenges.

Using Debt Consolidation Loans in North York to Pay Credit Card Debts

Many people in North York Ontario use debt consolidation loans in North York to help them cope with enormous credit card debts. It’s one method for debt relief that allows a debtor to pay off his current debts with a new loan that has a lower interest rate and longer payment terms.

Taking out a consolidation loan can be most helpful to people who have multiple debts. It can simplify their finances as it can solve three of the worst problems many debtors face:

1) High interest rates

Credit card debts can carry extremely high interest rates, some as high as 25 percent or more. Even if you keep paying the minimum amount required, there’s a good chance you’ll see your debt growing faster than you can pay off. It can be really hard to keep up with payments and ultimately you’ll find yourself paying more on interest charges than the principal amount you owe.  A consolidation loan may allow you to get a lower interest rate and save you money over the long-run. Take for example you have three credit cards at 18% interest, if you have a good credit rating and the capacity to repay, then it’s possible for you to get a line of credit at 11% interest to consolidate these debts into one payment. The lower interest rate allows more of your monthly payment to go towards paying down the principal amount of the debt, instead of on interest charges, thus allowing you to pay off the debt faster. You can make this work if you have a steady source of income to enable you to repay the new loan.

2) High monthly payments

Another problem people with lots of debt frequently struggle with are the high minimum payments, which are in many cases more than what they can afford each month. When you miss payments, you get charge more interest, monthly payment increases, more interest charges are added to the debt amount, the higher monthly payments keep getting --- it all leads to a domino effect and before you know it you can’t stay above water. If your monthly payment is too high, a consolidation loan can sometimes be an option to lower your monthly payment, and that can give you enough breathing room to get back on track.

3) Financial mess because of too many bills

Too many bills to pay can get you off track your budget very quickly. One thing it can lead to is that it makes it hard to even keep track of which payment is due on which date. When finances are not properly planned and controlled, you’ll soon start overspending, missing payments until you are struggling with an unending debt cycle. Your financial mess will only go on being an obstacle for getting out of debt unless you focus and start a plan to pay out everything you owe. A consolidation loan can help you deal with this problem by allowing you to pay up all your other debts and reduce the number of bills you have to pay.  This will streamline your budget and get you to focus on only one loan to pay each month, making it easier to turn your finances around.

For a lot of North York Ontario residents who owe more than they earn every month, debt consolidation loans in North York may be one possible option to help them repay credit card debts. If you want to know if you qualify for a consolidation loan, it’s best to speak with a debt professional, like a licensed insolvency trustee or a credit counselor, who can provide you with all the information you need to make the best decision.