Debt consolidation with a private lender to repay your creditors in one payment
Over-indebtedness solutions offered by financial institutions are sometimes difficult to access. This is not surprising, since the primary objective of banks is to make money, they are doing everything in their power to protect their interests, which explains the sometimes very demanding eligibility criteria. Indeed, from the credit file scrutinized to the guarantees required, the benefits of doing business with a financial institution can quickly seem slim compared to the disadvantages they entail.
You are not short of options! There are many private lenders in Quebec who are willing to offer you debt consolidation loans on much less demanding and intrusive terms than the bank. Here are the main advantages of consolidating your debts with a private lender to quickly repay all your creditors!
What is debt consolidation and its benefits?
Debt consolidation is not rocket science. This is a way to get rid of your debts effectively in one payment only. How is it possible? You will get what is called a debt consolidation loan from a financial institution or a private lender to pay off all of your creditors. Thereafter, you will reimburse your lender by paying the monthly amount provided for in the payment agreement.
So there is nothing simpler than the principle of debt consolidation, but what are the benefits? First, debt consolidation is a way to simplify the management of your finances. Indeed, you no longer have to repay a multitude of creditors with different interest rates. You will only have to worry about repaying your single lender every month according to the loan requirements.
Debt consolidation saves you money! Although the total amount you have to pay back is not diminished by granting a debt consolidation loan, the low interest rate attached to this loan brings with it many benefits and could save you money. thousands of dollars. Debts contracted with a credit card company usually have extremely high interest rates that drive you into a vicious circle where repayment becomes almost impossible.
You save your credit rating with a consolidation loan ! Monthly payment defaults seriously damage your credit rating, this is well known. Yet, there are too many people who simply pay the minimum amount on their credit card each month. Debt consolidation is therefore the long-awaited solution! As your creditors will be reimbursed in one payment by the bank, you put an end to your late payments and therefore to the damage of your credit report.
Debt consolidation even makes it possible to restore a credit rating that falls below an acceptable threshold. As you become a “good payer” able to pay all bills on time, your credit will slowly go up, but surely the slope!
You avoid the solutions of last resort! Consolidation is certainly not the only cure for overindebtedness! Other more radical solutions are also available to you, but they have their share of consequences that are, all in all, much more important. We are talking here about the consumer proposal and bankruptcy. Both of these mechanisms are governed by the Bankruptcy and Insolvency Act and availing one or the other leaves a significant mark on your credit record for many years. Your ability to borrow on credit is also compromised, which is not the case for consolidation. So, before throwing yourself at two feet in either of these options, seriously consider existing alternatives!
You will soon notice the nuance between the debt consolidation loan contracted with a bank and that contracted with private lenders. Although they pursue the common goal of profit, the criteria for loan eligibility often differ dramatically!
Let’s see the different requirements of each and why a private loan could be the solution for you!
What are the eligibility criteria for banks?
We sign and persist; obtaining financing from a bank is a complex and demanding process. This one will not accept to be on the losing side and that is why it will require all the necessary guarantees to feel safe! Their eligibility criteria reflect this mentality. Here are the criteria that banks usually require before agreeing to grant a consolidation loan, subject to the proviso that each institution is free to set its own standards;
-The debt ratio: Banks often demand that the debt ratio of the debtor be below 50%. This is not the case for the majority of private lenders who agree to deal with debtors with significantly higher debt ratios.
-The credit rating: It may seem odd to require a good credit record from an indebted person, but that’s what banks do. To have access to a debt consolidation loan, your credit file must have an adequate history, otherwise the bank will consider you an at-risk debtor. This will cancel your chances of getting the coveted loan or allow you to get the loan under much less advantageous terms.
-Stable employment: To guarantee your ability to repay the loan, banks require that you have maintained a stable job for a certain period of time. The period is usually 6 months during which you must have received a constant salary and a period of uninterrupted employment.
-The guarantees and the endorser: we do not escape, the bank protects his back! Many financial institutions require some of your property to be pledged as collateral. This will allow the bank to seize them in case of non-payment. In addition, it is possible that one of your relatives is called to endorse you. This is an option to avoid at all costs, since bail horror stories are not rare and have quickly rotten the lives of all parties involved.
The proof is no longer to be made, banks are very demanding when it comes time to lend money. The time when you need help the most is probably when they will be the least inclined to lend you a hand.
If your loan application from a bank is refused or you are simply looking for a viable alternative, take a look at what a debt consolidation from a private lender has to offer you!
What does a consolidation with a private lender bring you more?
Private lenders generally succeed where banks fail: to find a solution that meets your needs. Although private loans are subject to conditions of admission on the same basis as banks, the only difference is that they are generally much more flexible and offer options that banks refuse to offer.
By having eligibility criteria different from those of a bank, your chances of being approved by a private lender increase! Here are the criteria that private lenders usually require to lend!
-The ratio of indebtedness: In the private sector as with a bank, the debt ratio is taken into account. However, while banks require a rather low debt ratio, private lenders agree that the ratio is between 50% and 90% of the market value of your property. This opens the door for many debtors who are over-indebted at an advanced stage.
-The credit: The beauty of the private loan is that the credit rating is of secondary importance, while she is king and master at almost all financial institutions. Conversely, some private lenders do not even consider the credit rating when deciding whether to grant the loan, but only your ability to repay them their due.
-Rapidity of the process: The advantage of doing business with private lenders is that they are aware of the urgency of your situation and that they act knowingly. This means that the approval process is done much faster than at a bank, because each lender conducts its due diligence according to its own criteria, without having to respect the suffocating bureaucracy of a bank. In addition, they have access to significant funds that they can send you faster than a bank can.
In addition to the eligibility criteria, private loans often follow a certain tangent as to the conditions under which they are granted.
-The amount of the loan: For the game to be worth it, private lenders often require that the amount of debt is around $ 30,000 and more, which is not the case for financial institutions.
– Borrowing capacity: With a private lender, you will obtain financing up to 75% of the market value of your property, which gives you access to a lot of additional funds to pay off your debts.
Interest-rate: If credit debts come with interest rates around 19-20%, getting a consolidation loan from a private lender will give you access to interest rates around 10%. %! Substantial savings are waiting for you by doing business with private financing!
-Redemption Duration : The repayment term of a private consolidation loan varies due to the eligibility criteria specific to each of the lenders. That being said, it is rare to see a repayment period in six months, despite the fact that a longer term is the norm in the industry!
-The mortgage of your house: if you own a house, it is quite possible that it is burdened with a mortgage. As such, the value of your mortgage is a factor that many private lenders have a special interest in, so it may be beneficial for you to contact one of these lenders to explore the different doors that are open to you!
It is no exaggeration to say that the world of private lending differs greatly from that of large financial institutions. Their eligibility requirements are in worlds apart and the services they offer, albeit similar, each have their advantages and disadvantages. Like what each option corresponds to a particular debt profile!
Be aware, however, that no bank can compete with the speed of the private sector or the latitude it enjoys! You will know where to turn if you feel that your request is on the non-standard side of the financial sector!
Quickly find a private lender to repay your creditors!
Getting out of over-indebtedness can seem like crossing an insurmountable mountain. The interest rates that make your wallet bleed to the last drop, the ever more insistent and incessant calls from your creditors being heard and the morale that falls flat are all signs of financial health that falls in ruins! Do not wait before it’s too late!
If one or more financial institutions have slammed the door in your face, turn to a private lender who will put money back in your pockets! The solutions they offer you are personalized, realistic and adapted to the reality of your situation.
So, stop bothering the banks for a loan that will never happen and let Bye Bye Debts get the job done to find the private lender you need. By folding the form at the bottom of the page, you will quickly get many submissions allowing you to compare different lenders in your area to make the best choice!