The Steps Involved in The Process of Acquiring Debt Consolidation with Regard to Dues on Vehicles

August 12, 2018

Vehicles are often needed for transportation and having a personal car is always suitable for commuting from one place to another. Some families have more than one vehicle. Sometimes it is not possible to directly purchase an automobile and so to acquire suitable vehicles loans are taken. If a person is paying the loan for multiple vehicles, then it is advisable to opt for a vehicle consolidation loan. It is a type of borrowing which will help the borrower to avail the opportunity of making a single payment during a month and will also help the individual to save some money in the process. 

Understanding the concept of consolidation loan taken for automobile debt payment 

In simple terms, consolidation refers to the act of combining outstanding dues on the loan which were taken for purchasing vehicles. This will ball up the multiple payments into one lump amount which has to be paid. This option is particularly suitable for an individual in the following instances:

  • The person has dues which have to be cleared for different lenders at different dates of the month. 
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    The borrower wishes to opt for an interest rate that is lower.
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    The person who has taken multiple car loans is trying to elevate his/her credit score by choosing to pay for a single loan instead of many.
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    The monthly payment which is being made after paying to different sources is quite huge so if the individual who has taken the loans wants to lower the payment amount then also consolidation is the appropriate choice.

Points to be kept in mind while applying for a consolidation loan


 

All financial lending institutes do not offer the option of loan consolidation to each and every individual. Some norms are governing the procedure. Hence one should know the different aspects involved in the process of acquiring a loan for consolidating all the outstanding dues present on multiple cars 

  • Acquiring important data - All the outstanding balances which are present in different loan account have to be combined together to find out the amount that is left to be paid. Once this amount is calculated it will become easier for the borrower to make a consolidation application because in such applications one needs to mention the amount he/she wants to borrow specifically. Searching for suitable lenders also means looking for information because all lenders do not provide the same rate or similar agreement conditions. Hence a person needs to search for the most suitable lenders who will be likely to provide the individual with a consolidation loan. Online calculators are also present to figure out the payment that one has to make monthly after consolidation so such services can also be used for determining the value of periodic payments. For more information in this regard, one can visit https://www.nationaldebtrelief.com/debt-consolidation/ and look for the services available for relieving different kinds of debts.
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    Income sources for availing loan - When a lender agrees to sign a loan agreement with a particular individual the borrower's source of income is always evaluated because if a borrower doesn't have a steady source of income then providing him/her with an unsecured loan is of great risk for the lender or lending institute. Usually, a lending agency will look at the professional background of the borrower, and the borrower should be able to show at least half a year of active employment. Hence before choosing to have a meeting with a particular lending institution it is important to collect the first and last paycheck of the institute where the person is employed.
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    Adding up insurance policies drawn while making a vehicle purchase - When consolidation is chosen for adding the respective loans taken for different cars it is also important to combine and calculate the insurance taken for each and every vehicle. Insurance companies that provide beneficial offers and discounts for insuring more than one vehicle are better. In case a person has multiple policies from a single Insurance Company it is a sensible idea to combine the coverage provided by that insurance.
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    Permanent residential status - When lender chooses to provide an individual with a consolidation loan the individual lender or the lending agency will definitely look at the residential status of the concerned borrower because the presence of a stable or permanent address is a factor for assessing the creditworthiness of a particular borrower. If the person who has opted for the consolidation loan has stayed in a particular place for a considerable period of time then the evaluation is positive for the lending agency whereas individuals are having a good ratio between debt and income but not having all lenders do not easily consider a permanent place of residence for a consolidation loan. Therefore, the borrower should have utility bills proving his/her residential status. Identification is also important, and any suitable document like a driver's license can be used for proving one's identity.
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    Self-evaluation of the credit history - The credit taken by a particular individual throughout his or her lifetime builds the credit history. It is always sensible to know one's position with respect to the rating offered by credit bureaus. When a lender is approached for a consolidation loan, then inconsistencies in the credit history can be the reason for the rejection of the loan. In some cases, even if the history of a person with respect to loan repayment is not that good, still consolidation might be offered, but the interest rate won't be that low. Therefore, the credit score of a person will affect his/her ability to acquire better deals on loans.

As a result, it is important to know the different elements needed for making an application for consolidating all the loans, and it is also important to select more than one lending agency so that if a particular lending agency rejects the application, then there will be other choices in the list of suitable lenders. 

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