What Is A Debt Consolidation Loan?

2014-12-23   minute read

One of the first options anyone with financial difficulty should consider is consolidating their debts through what is normally called a debt consolidation loan. In particular, if you have a number of high interest credit cards, taking out a loan to pay the credit card balances off can often save you significant interest costs and give you just one monthly payment to make.

Person holding their phone in front of a laptop

In order to get a debt consolidation loan, you will need to have sufficient income to make the required payment, a good enough credit rating to qualify for the loan and make sure you do not incur additional debt after you have taken out the consolidation loan.

You will also need to consider carefully how much interest you can save, whether you can afford the required monthly payment and how stable your income will be over the term of the loan.

A debt consolidation loan should have only positive implications for your credit rating, provided you make the required payments. Anything other than making the required payments to your creditors will obviously reduce your credit rating. If your credit rating is already poor (because you have missed payments or had your account turned over to collection) you may find that you don't qualify for a consolidation loan.

If you aren't able to qualify for a consolidation loan, there are still other options, including a Consumer Proposal. Contact your local MNP Ltd. office to discuss all of your available options.

Consultation icon