Financial troubles can turn into a huge burden for any person. Some face a gradual buildup of money owed, while others have no choice but to handle a vast expense seemingly out of nowhere. Whatever the case is, getting relief is important.
A debt consolidation loan often gets compared to a traditional bank loan for obvious reasons. While both provide money for people to use in a time of need, more and more people realize the benefits of a specialized debt consolidation loan overall.
What’s the Difference Between a Debt Consolidation Loan and a Personal Loan?
A debt consolidation loan is a specific type of personal loan. Most debt consolidation loans offered through specific lenders focus solely on helping people reach financial freedom once again. As the name suggests, it’s all about combining existing debt and getting it all under one lower interest rate in a single monthly payment plan.
A personal loan is something people apply for to cover various costs. It could be to pay off debt, but it could also be to fund a project or trip. A lot of lenders will ask for a loan during the application process.
The Best Way to Qualify for a Debt Consolidation Loan
Going with Dutton Lending (or any other debt consolidation loan company) requires a few simple steps to get started. The number one starter is taking a look at overall credit. The stronger the credit, the better chance a person has of qualifying for the best rate possible.
After that, comparing lenders is just proper due diligence for any person. Dutton Lending prides itself on being one of the best options out there, but there is a lot of competition in the industry. Look at rates, repayment terms, fees, and eligibility before signing on the dotted line.
Completing the application is pretty easy, and funds become available quickly. Online debt consolidation loans from companies like Dutton Lending pride themselves on being extremely fast. This helps those who are in a bit of a pinch and want to get everything figured out as quickly as possible.
Why Do Bank Loans Take So Long?
Anyone who’s had the opportunity to take out a personal loan online will think that they are stepping back in time to take out a loan from a bank. While banks are speeding the process up as much as they can, it’s still tough for them to keep up with the growing competition online.
Going through a big bank can take time because there are so many loans to process. Since it’s a personal loan, an individual usually isn’t the highest priority. They offer so many other banking services that it gets pushed to the back.
The application process takes a little longer because they usually have more requirements to get the money. For example, they could be a little stricter with their credit score limits and other details. Proof of income is also much more stressed from a bank than from a lender online.
That said, some banks move pretty quickly to handle personal loans. Just don’t expect them to compete directly with some of the smaller online-only lenders like Dutton Lending that specialize in this.
Is a Debt Consolidation Loan the Right Move?
Every person’s situation is different, but a debt consolidation loan from a company like Dutton Lending could be perfect for solving issues that don’t seem to fade away anytime soon. Keep this in mind before applying, as companies like Dutton Lending ultimately want people to have success.
A debt consolidation loan won’t serve its purpose if a person can’t make the required payments. Yes, the amount owed each month could go down, but some payment will still be required to work towards a full resolution. If that new monthly payment proves hard to pay off, problems are likely to continue.
The whole purpose of a debt consolidation loan is to get a better interest rate. If that seems impossible, even a company like Dutton Lending won’t be able to help. Pay attention to the interest rates before signing up.
Amount of Debt
A general rule is that if a person feels they can pay off their current debt within one year, they likely don’t need a debt consolidation loan. For those who think they need more than a year, this option is worth exploring.
Why Alternative Solutions Could Cause Problems
A debt consolidation loan seems like the best option for a lot of people, but there are alternatives out there. However, they all come with some negatives that the average person might not want to deal with.
A balance transfer card can act as a debt consolidation option for some people. When a person first takes out a card, they will sometimes offer a 0% APR introductory period as long as the card is paid off in time. With that said, many apply for a debt consolidation loan because of credit card mismanagement. Taking out another credit card doesn’t solve the problem.
There’s also a chance that a new credit card isn’t even possible if a person is way behind on payments for others. The solution might work for some, but most will find a personal loan for debt consolidation to be better.
Filing for bankruptcy might seem like a simple solution, but it will linger for a long time. In many cases, people can avoid bankruptcy by looking for other solutions. It’s rarely as bad as people think it is initially. Getting on top of everything and taking action now makes a difference.
A bankruptcy stays in a person’s history for years. It limits what a person can do for quite a while. It does make sense in extreme situations, but if a personal loan fixes things, it’s almost always better.
Borrowing From Family/Friends
It’s always a difficult decision to have to borrow money from family and friends. Some are fine doing it, while others will never think of it. Tread with caution because money can come between people very quickly.
Personal loans exist to help people out in a time of need. Use them properly, and they help out tremendously. Ill-advised use ultimately puts a person in a bigger hole. Have a plan in place with the funds from the beginning, and everything should work fine.