How To Apply for Debt Consolidation Loans?
Step#1: Specify all the terms of your loan
At what rate did you take out a loan, how much do you pay and how much still has to be overpaid for the remaining period? Take a look at the loan agreement. It lists both your interest rate and the amount of the monthly payment, as well as the total amount of the interest overpayment.
In the payment schedule there is a selection for each month – how much of the payment is used to repay the loan body, and how much to pay interest. In most cases, the first years, interest is the lion’s share of the payment. You can calculate how much you still have to overpay. To do this, you either need to look at how much interest you have already paid, and subtract this figure from the total amount of the overpayment. Or you may simply add up all future interest payments.
You can also clarify the amounts and terms of payments by phone, by calling the bank’s hotline, and in the Internet bank, if you use it. When assessing the loan cost, consider insurance, if any. If you pay for the service of the card that is used to repay the loan, add these expenses to the total amount of expenses. Debt consolidation loans may help you deprive of great costs.
Step#2: Find profitable bank offers
Explore the offers of different banks. Remember to make sure they have a license. Now the refinancing service is almost as popular as a loan. Find out on what terms different banks offer to consolidate loans and choose the appropriate option.
Please note that banks have time and amount limits. For example, you cannot sign an agreement with one bank, and the next day you have to come to refinance in another – usually the bank’s rules indicate that a certain time must pass between these events.
Step#3: Calculate how payments will change
Once you’ve found the right offers, calculate how your monthly payment and overpayment will change using an online calculator. Don’t forget to include extra costs, such as insurance.
Step#4: Find out what other expenses can be present
Please be aware that the final refinancing rate may differ from the one indicated on the website or in the advertisement. The rate depends on various terms, for example, the amount and term of the loan.
In addition, if you consolidate a mortgage loan, you will have to spend money on re-registration: re-evaluate the real estate and register the mortgage, pay for notary services and insurance (or even more than one).
If, under the terms of a car loan, your car is pledged by the bank, then you will have to reissue the pledge – and this is also an expense. In the refinancing agreement, two rates are often indicated: a higher one – before you transfer a car or an apartment as a pledge to a new bank, and a lower one – after reissuing the pledge.
Step#5: Apply to the bank
If you have calculated everything and it is obvious to you that you will save a lot, contact the bank whose terms seem to be the most favorable for an accurate calculation. Since refinancing is, in fact, getting a new loan, the bank will put forward standard requirements for the borrower: a certain age at the time of loan repayment and work experience, official employment.
You will need a standard set of documents: an application form, an ID, documents that confirm employment and income, as well as documents on an existing loan – an agreement and a payment schedule. If you are satisfied with all the term, prepare and submit the documents. If everything is in order with them, the bank will approve the refinancing and issue a loan.
When you have already arrived at the bank, submitted the documents, and the employees have calculated everything and prepared a final offer for you – do not rush to sign the agreement. By law, you have 5 days to compare and weigh everything again – during this time, the terms of an already approved loan cannot change. True, this requirement does not apply to mortgages, but banks often send the borrower a draft of a new loan agreement in advance and give time to think.
Tags: consolidation loan, finance, loan