If you’ve been reading this blog for a while, you probably know the truth about debt consolidation loans. Like, they are one of the best ways to get out from under multiple loans. They combine multiple payments into one convenient monthly payment, help you pay off your debt faster and usually save you a lot of money you would otherwise spend on high interest rates.
However, a lot of people don’t know about debt consolidation loans or have only heard about them secondhand. As a result, there are a few debt consolidation myths floating around. These can cause people to form the wrong ideas about debt consolidation, and even cause them to not apply for a debt consolidation loan when it could really help them.
Myth 1: You can Only get a Debt Consolidation Loan if you Have Poor Credit or are Struggling to Make Payments
This isn’t true at all. While it is true that people who are struggling financially or have a low credit score could really benefit from debt consolidation, anyone who has multiple debts might want to look at debt consolidation as a way to cut down on the the number of payments they make each month and save money.
Myth 2: Debt Consolidation Loans Require a Cosigner
Again, not true. While you may need a cosigner if you have a weak credit score or your income is too low to meet a financial institution’s underwriting guidelines, you can get a debt consolidation loan by yourself.
Having said that, a cosigner on a debt consolidation loan can be advantageous. You may be able to get better terms on your loan, such as a lower interest rate, than you would be able to if you applied for the loan without a cosigner.
Myth 3: You Can’t get a Debt Consolidation Loan Unless you Have a lot of Debt
While this is situational, the truth is there’s no limit for how much or little debt you can consolidate. Having said that, you’ll want to make sure that debt consolidation will actually help you to get ahead financially. Make sure any debt consolidation loan offers give you the following benefits:
- Lower overall monthly payment
- Better interest rates
- A shorter time to pay off your loan
Myth 4: You can get a Debt Consolidation Loan Without Getting a Credit Check
This is technically true, but you should be extremely wary of any lenders who would give you a loan without first checking your credit. The truth is, you want a lender to check your credit, especially if you have a good credit score. Checking your credit gives a lender a complete view of your financial history and helps them figure out the best solution for your needs.
Any lender who claims they can give you a loan without first checking your credit likely engages in predatory lending practices, like inflated fees and charges, encouraging you to borrow more than you should or even lying about the true cost of the loan.
Get Help With Debt Consolidation at First Alliance Credit Union
Debt consolidation loans are very useful, but myths like the ones above can confuse people about whether debt consolidation will help them or not. Once you understand the truth about debt consolidation, you’ll have a better idea of whether it can help you or not.
If you’d like to get help paying off multiple debts, apply for a debt consolidation loan at First Alliance Credit Union today. Our knowledgeable lending advisors will talk with you about the pros and cons of debt consolidation and make sure you get a financial solution that works best for you.