it is crucial that the lender is made aware that the reason for the new loan is to consolidate all the existing ones
New York, NY (PRWEB) June 24, 2014
National Debt Relief explains in an article published last June 23, 2014 some reasons that consumers are denied of a debt consolidation loan. The article “Three Ts Of Debt Consolidation Denial” lays out the most common basis of a lender to deny a specific borrower in taking out a loan to consolidate all existing ones.
The article shares how debt consolidation has numerous advantages for a borrower looking to simplify debt payments. Over the course of life, a consumer might have taken out a few signature loans for little emergencies, incurred credit card debt for some home appliances and auto loans to get around the city. All these loans would have their own set of payment amount, interest payment computations and due date. These are a lot to take in on a monthly basis.
Debt consolidation pays off all the loans that the borrower will enroll in the program. In return, debt consolidation will only have one monthly payment amount, one interest rate and more importantly, one due date. This is crucial because the borrower would not run the risk of overlooking monthly payments only because of the sheer number of checks to be sent out to different lenders.
But as the article shares, not everyone approved for a debt consolidation loan. One area a lender would look into is that if the borrower has too many existing loans. At this point, it is crucial that the lender is made aware that the reason for the new loan is to consolidate all the existing ones. It is not to add to the current list but streamline the payments every month.
A low income coming in every month is another criteria that a lender will keep a close eye on. The article explains that debt consolidation works best for consumers that are able to meet at least the minimum payments on all financial obligations. Taking out a debt consolidation loan where the income falls short of the required minimum payments would only put the borrower in a deeper financial hole.
The article points out as well the importance of a favorable credit score. The lender will primarily base the interest on the borrower’s credit score. The higher the score, the lower the is the risk on the borrower defaulting on the loan. The lower the score, the lender is at more risk of not being able to collect the loan. They either charge a high interest rate or deny the application outright
To read the rest of the article, click on this link: http://www.nationaldebtrelief.com.