Debt consolidation or refinancing is a process where you regroup all your loans or lines of credit in one single loan. This new loan has a new rate, defined by the lender, which is generally an average of your current loans' rates. Debt consolidation also has a new maturity date, which implies a different amount of repayment.
Generally the repayment of a refinancing loan is lower than all your actual loans.
What kind of loan can I refinance?
With debt consolidation, you can refinance almost any kind of loan:
> Auto or car loan
> Student loan
> Personal loan (travel, wedding, home improvement, etc.)
Why should I refinance my debt?
Having multiple loans to manage can be really difficult. The payment dates, the rates and the loan conditions are different for each loan.
Debt consolidation is a good way to help you better manage your money. It gives you a lower rate than all your current loans, in a single payment and with a clear cost and repayment schedule.
Because credit card loans and lines of credit carry very high interest, it’s not unusual to use debt consolidation to refinance your credit card debt.
At the end, debt consolidation helps you save money.
Refinancing your debt is the best way to improve your finance if you have multiple loans.
Am I eligible for a debt consolidation loan?
To be eligible for a debt consolidation loan, you’ll need to meet some criteria:
> Be a UK citizen or permanent resident
> Be 18 or older
> Have a good credit history with your current loans.
> Proof of income (for example, most recent pay stubs and W2s)
> Copy of ID
> Proof of residence (for example, a copy of a utility bill)
> Two months' worth of statements for each credit card or loan you wish to pay off
> All your current loan paperwork
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