4 tips for prepping for debt consolidation
If you’re repaying multiple debts, juggling multiple repayment deadlines – plus multiple interest rates – can be a hassle.
One solution is debt consolidation. This means rolling all your debts together, so you make a single repayment each month (instead of several). Often, you can land a lower interest rate, too.
Before applying, it’s essential to prepare carefully. Too many rejected loan applications could have a negative effect on your credit score.
1. Check your credit score
Your credit score is a number based on your credit history. It indicates how reliable you are when repaying debts. The lower your score, the more reluctant a lender might be to approve your application for a debt consolidation loan.
2. List all your current debts
The next step is to round up the debts you intend to consolidate. This could include credit card debt, personal loans, payday loans, or buy now pay later debt.
Calculate what it would cost to repay them under present arrangements, including all interest and fees. Then compare that with how much you’d pay once they’re consolidated, including any early exit fees on your current debts.
FYI, MONEYME doesn’t charge any early exit fees on our personal loans or debt consolidation loans.
3. Prepare documentation
Most lenders want to see evidence that you’re in a good position to repay your debt consolidation loan. They might ask for paperwork demonstrating your employment status, assets and liabilities, and income and expenses. Getting it together can be complicated and time-consuming.
At MONEYME, our application and approval processes are entirely digital, which means they’re more efficient. For example, you won’t need to print out bank statements because we’ll look at secure, view-only pdfs instead.
4. Calculate your monthly repayments
It’s important to know exactly how a debt consolidation loan will impact your budget.
You can work out your potential monthly repayments with MONEYME’s personal loan calculator.
Simply enter how much you’d need to borrow (to cover all your current debts and any exit fees), and how long for – and the calculator will come up with an interest rate, plus how much you’d have to repay each month.
Then, you can compare this with your budget and how much you would be paying under the current arrangement and see which is best for you.
Ready to roll?
Once you’ve taken these steps, you’ll be in a much better position to submit your debt consolidation loan application – plus, you’ll have a good idea of how it will benefit you, and what it will mean for your budget.