Where can I get a consolidation loan?
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UPDATED: Sep 19, 2012
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Prospective consumers and borrowers have a number of options when it comes to finding where to obtain a consolidation loan.
A consolidation loan is a type of financing that is used by a borrower to pay off multiple debts. This can help borrowers who are overwhelmed with multiple loans and multiple monthly payments. In effect, it simplifies the payment process by having only one debt to pay off each month in addition to possibly awarding a borrower with a lower interest rate.
Borrowers should review their personal finances in order to better understand their current debts prior to filling out an application. When applying, borrowers must review the policies of their chosen lender in order to understand the different rules that apply to consolidation loans.
It’s important for borrowers to shop around since not all consolidation loan lenders are the same. Consolidation loans can be found at credit unions, banks, and small personal lenders. Large financial institutions such as banks with household names may not necessarily offer a superior interest rate when compared to smaller lenders such as community banks. Since community banks and credit unions are mostly customer owned they typically have lower interest rates.
If borrowers seek a consolidation loan at a credit union or a bank that they are a customer at, they may be able to obtain a competitive interest rate. Lenders typically try to keep current customers happy and satisfied with their current provider lest those customers decide to transfer their accounts to another lender.
Additionally, peer-to-peer (p2p) lenders are a viable lending option if borrowers are comfortable with the process.
Finally, the individual characteristics of a borrower are also important. Borrowers with poor credit histories and no collateral should expect to pay a higher interest rate. Hopefully this interest rate is still less than the rates attached to their multiple loans prior to consolidating.