All Rolled into One
Last time we spoke, or I wrote and you read to be more specific, we discussed missing payments on credit cards and other debts and how that has a direct impact on your credit rating. The recommendation was to keep a calendar of when your debts are due but there is only so much room on a calendar, you know. And if you’re anything like me and the millions of other people out there who have debt in a lot more different places than they should, you’re going to want think about simplifying your debt management. You’re going to want to think about consolidation.
Banks don’t love consolidating debt. You can argue that you’re trying to get your life in order and the bank is going to make its interest off of you anyway so why wouldn’t they want to take your debt on in a consolidation loan? The truth of it is that the interest the bank will make on you is peanuts compared to what they’re making off people who actually have money to invest in the bank. The other truth, the one that is a little harder for all of us to admit to ourselves, is that our credit mistakes and mishaps are not the bank’s problem.
That said, if your credit is decent enough and you can at least demonstrate the capacity to repay your loan, the banks will not just shut the door in your face. If you want to increase your chances of getting approved, you should ask for this loan from the bank you’ve been with the longest, assuming you haven’t defaulted on previous loans with them. This bank will know you, in as much as a bank can say that they actually know you, and will take that into consideration when looking at your application.
Be reasonable and be timely. If you walk into a bank looking for a $50K loan because you can’t make your payments next month and you started missing them last month, you’re past the point of assistance. You are basically the kind of client that I would laugh at when I looked at your application. It should be noted that my clients were never sitting in front of me when I reviewed applications and therefore I am not a complete jerk.
Consolidation loans should be considered when you can see that things might get out of hand further down the road. If the bank sees that you’re ready to take responsibility for your debts and get control of your finances, that you’re capable of doing so and that you haven’t mismanaged that debt too poorly beforehand, then you’ll likely be let in the club. Club privileges include one easy payment each month to one creditor, a likely lower interest rate than what you were paying prior and a clear path to actually being debt free by the time you finish paying out this loan.
Considering these club benefits, I would say the membership fees are definitely worth it.
Note about the author:
Joseph Belanger is a Toronto-based writer who blogs about film at www.blacksheepreviews.com
