A cheap rate loan is regularly used to consolidate debt. Rather than making lots of small credit card, loan and bill repayments, a loan for debt consolidation can be taken out to manage personal finances more effectively. Depending upon the applicant’s credit score, the availability of equity and how much money is required, a secured or unsecured low APR loan could be chosen to put all debts under one roof. In the current climate, the lowest interest loans will only be offered to the best customers.
Approval for the Lowest Interest Loans for the Consolidation of Debt
- Avoid making too many applications for low APR loans for debt consolidation. Whilst lenders expect to see some searches, too many is often interpreted as a sign that a potential customer is experiencing money problems. It can also be interpreted as a sign of fraudulent activity.
- Close down any unused or obsolete credit and charges card accounts. Lenders may reject applications if they feel that a prospective customer will leave a credit account unused. An inactive account also means that less credit will be available for other financial products.
- Check credit reports for errors. It is important to get any erroneous data corrected before applying for a cheap interest rate loan for debt consolidation. The Fair Credit Reporting Act allows either the individual or a credit repair attorney to correct these problems. The appropriate supporting information will also need to be provided.
- Always pay back any money owed punctually. Each timely repayment will mean a higher credit score and increases the likelihood of approval for a cheap rate loan for debt consolidation. Miss or make a late payment and it will lead to rejection or a far higher APR.
- Pay down debt before borrowing any further money. An income-to-debt ratio of over 36% will often lead to a decline for a debt consolidation loan. This is because the customer has less scope to cope financially in the event of a change of personal circumstances.
- Don’t believe companies that claim that they can perform rapid credit repair or get their client a brand new new credit report. It is not possible to do this. Even if they could, the attainment of any form of credit under a false pretence is considered to be fraud.
Consolidating Debt with a Loan from a Person-to-Person Lender
Peer-to-peer lenders provide unsecured low APR loans for debt consolidation to customers with excellent (A* and A), good (B) and fair (C) credit ratings. Prosper.com cater for customers who are looking for an alternative to traditional bank lending, not to mention an opportunity to explain their personal circumstances to lenders. The lower the customer’s credit score, the higher the rate of interest that person will be charged. Lenders bid for the borrower’s business which means that low interest rate loans are available from just 7.5% without the need to provide any collateral. UK customers may wish to consider Zopa.com.
Cheap Rate Loans for Debt Consolidation from a Bank
Despite falling central bank base rates, rising unemployment has led to an increase in the cost of borrowing money. Existing customers with an excellent credit rating are likely to find that they are already eligible for certain financial products. Whilst acceptance is guaranteed, it is still worthwhile using a comparison site, such as moneysupermarket.com, to trawl the market in order to pinpoint cheap interest rate loans. The first offer on the table is always more convenient, but won’t necessarily be the most affordable offer.