National Debt Relief recently published an article titled “4 Ways to Achieve Debt Relief Through Debt Consolidation”. The January 23, 2017 article helps readers better understand how debt consolidation can help better manage their debts. The first option mentioned is to take out a low-interest debt consolidation loan. According to the article:

“One of the most popular ways to get debt under control is with a low-interest debt consolidation loan. This is, as you might guess, where you get a loan and use its proceeds to pay off multiple debts. It can make sense when most of your debt is unsecured debt like credit cards, personal lines of credit, medical debts and department store credit cards. When done right, it can even help improve your credit rating by making it easier for you to repay the money.”

But what are the next steps in obtaining such a loan? First, please do research to determine if the advantages of a debt consolidation loan make it the right fit for your needs. There are several types of financial institutions that offer debt consolidation loans and can help you determine if you should take the next step.

  • Specialized Lenders – CapitalFront falls into the specialized lender category. Specialized lenders do not accept deposits like a traditional bank or credit union and instead generally pays off your existing creditors directly and then send a monthly bill for the balance. Specialized lenders generally begin at prime rate plus 5%. While rates can be higher for those borrowers with middling credit, credit history requirements may be less strict than traditional banks.
  • Traditional Banks – Both community banks and national banks offer secured and unsecured debt consolidation loans. It may be difficult to find traditional banks offering lower than prime plus 5% along with repayment terms less than 60 months.
  • Credit Unions – Credit unions offer debt consolidation loans, occasionally at discounted or fixed rates for its members. Depending on the credit union, terms are generally from 12 months to 60 months.
  • Payday Lenders – An unsecured payday loan does not require a credit check and allow the borrower to settle debts on their own. Generally these loans are given at higher interest rates like a fixed 15% or prime plus 12%. The amount you can borrow is limited to your monthly earnings.
  • Peer-to-Peer Lending – P2P lending is somewhat new in the borrowing industry and facilitate unsecured loans in which individuals investing receive a cut of the interest charged. Depending on your credit history, rates can range from prime plus 3% for those with excellent credit to as high as 30% for those with poor credit.

Still not sure if a debt consolidation loan get you out of your financial troubles? Take a look at our debt consolidation loan example and see just how much you can save. Debt Consolidation isn’t right for everyone. Make sure you consider the pros and cons of debt consolidation so you can make an educated choice.

A Small Leader in Business Lending

CapitalFront was launched with a simple premise – create an easy, accessible and rapid process for small and mid-size businesses to fund their growth. CapitalFront strives to bring a wide array of financial products, including merchant cash advance, receivable financing, factoring, SBA lending  and fixed rate term solutions, to independent business owners nationwide. Call today or fill out our online application.

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