Debt Consolidation Loans

Debt consolidation helps the borrower to change the terms of the contract and ease the debt burden. This service can be used if you have unplanned expenses. It is quite popular in Boston, Massachusetts.

Advantages of debt consolidation

Consolidation is combining multiple loans into one. As a rule, a reduced rate is applied to such debts, so the debt load on the borrower is reduced. A single loan is also convenient for other reasons:

  • it is easier to manage one debt;
  • the debt repayment scheme is individual and depends on the client’s financial situation;
  • you can attract co-borrowers, collateral and guarantors;
  • the credit score increases as the number of regular payments decreases;
  • the total amount of monthly payments is reduced;
  • less money is spent on fees for servicing multiple bank accounts, transactions;
  • service in one financial institution;
  • if you successfully complete the program, your credit history improves.

Financial managers are usually involved in drawing up a debt consolidation program. They meet with the client, find out the reason for non-fulfillment of the loan agreement, and then determine on what terms their client can return the loan.

Disadvantages of loan consolidation

You can use such a service only for valid reasons — for example, due to illness or dismissal. This is especially true for secured loans. After all, banks are more willing to go to the procedure of compulsory debt collection.

  • banks are more likely to offer the program to selected customers;
  • the borrower must be solvent;
  • consolidation fee is charged;
  • the lender requires collateral or surety;
  • if payment discipline is poor, more stringent conditions are imposed;
  • not all banks have such a service.

Preparing for debt consolidation

Before applying for a debt consolidation loan, the borrower must carefully prepare. Reckless use of banking services can significantly worsen the financial situation.

The borrower is recommended to:

  • Assess changes in indicators of financial burden because of debt consolidation. The data obtained as a result of the calculations should be compared with information about the total expenses that will arise without the merger of loans. Sometimes it is more profitable to repay several loans, for example, if the term of one of the loan is nearing the end;
  • Review different financial institutions and choose the most profitable option taking into account the loan amount, interest rates, term and date of monthly payments. Special attention should be paid to additional services and conditions for imposing penalties;
  • Make sure that the selected consolidation option is not only cost-effective but also affordable in terms of speed of allocation and approval, collection of documents, availability of additional fees, and quality of service;
  • Specify the list of required documents in the financial institution, and then collect them as soon as possible.

The decision to combine loans should be made taking into account financial capabilities and based on information about the current financial situation. In order not to get into an even deeper debt hole, the borrower needs to think about the risks that will have to face after debt consolidation.

Before applying for a debt consolidation loan, you need to consider:

  1. The feasibility of consolidation. The new loan should be more profitable than previous loans;
  2. Requirements regarding collateral;
  3. Loan conditions, in particular rates, fees, commissions, and monthly payments;
  4. Information about the bank and the loan pooling program chosen by the borrower;
  5. Additional fees (if the consolidation option is paid).

We recommend that you study the reviews and check the reliability ratings of the lender.

Important! You’d better not contact organizations that have many negative reviews from experts and consumers. Only reputable financial institutions should be involved in cooperation.

How to combine several loans into one: instructions

After completing the preparatory work, the borrower can proceed directly to the consolidation. The procedure begins with submitting an application. In the application, you must specify your ID, information about existing loans, and a phone number for feedback. Some lenders also ask to justify the reason for applying for help.

Standard consolidation algorithm:

  1. Search for a profitable loan product, study the conditions;
  2. Submit the application and the required documents to the selected credit institution;
  3. Wait for the lender’s decision;
  4. Sign the loan consolidation agreement;
  5. Get funds to repay previous debts.

The stages of loan consolidation may differ depending on the bank and the type of procedure chosen. For example, if the collateral is used, you will have to provide information about the property selected to secure the transaction. In any case, the debtor will be forced to pay one large loan instead of several small loans.

Why would you get rejected for a loan?

The decision to combine loans at the initiative of the client is made by the financial institution. Permission from the original creditors is not required. As a result, the borrower will be able to increase the chances of concluding a transaction with the most favorable conditions.

Reasons your loan application was declined:

  • Insufficient income;
  • Age restrictions;
  • Bad credit history;
  • Misleading the lender;
  • Errors when filling out the application;
  • Repeated loan consolidation.

To increase the probability of approval, you should pay attention to the reasons for rejections. As a rule, applications are rejected due to typos or non-compliance of the client with the bank’s requirements. After correcting the mistakes made, the application can be submitted again.

Important! Debt consolidation will be denied to borrowers who previously carried out refinancing or restructuring under the contract. A strong reason for rejecting the request is also the concealment of important information.


Any change in the terms of the original loan entails risks. Consolidation is no exception. However, a well-executed combination of loans will allow you to find a real way out of a difficult financial situation. The predominance of advantages over disadvantages contributes to the growing popularity of this banking service among the population. Consolidation will allow borrowers to get rid of problematic obligations with minimal losses and maintaining an impeccable reputation.