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When it comes to debt, it can be challenging to manage multiple lenders with different interest rates and payment dates. Consolidation may be a way to simplify your finances and potentially create a path toward paying off your outstanding debts.
A debt consolidation loan is a type of personal loan that combines multiple debts into one, potentially with a lower interest rate. Keep reading to learn how to get a debt consolidation loan and simplify your debts.
You might use the funds from a personal loan to pay for things like emergency expenses, home repairs or debt consolidation. These loans are installment loans, meaning they are paid back with a fixed interest rate on a set timeline.
Using a personal loan for debt consolidation may allow borrowers to combine multiple debts into one monthly payment. This single loan may have a lower interest rate and might be easier to manage than multiple payments. Sometimes, you receive the money in a lump sum, while in other cases, the lender pays off the debts for you. In either case, you’ll generally pay off the new personal loan in fixed monthly installments.
The terms of a personal loan are based on factors like the borrower’s credit history and income. Depending on your credit score, the interest rate offered may not be lower than what you’re currently paying. Always read through any loan agreement before accepting.
Here are some steps to consider when applying for a personal loan for debt consolidation.
The first step to applying for a personal loan is to consider if it’s the right option for you. Look at your current debt load and figure out what size loan you might need. Keep in mind that these loans tend to require strong credit.
Consider all your choices when applying for a personal loan. Different lenders may have different terms, fees and interest rates. Look at your budget and determine a monthly payment that works for you.
Once you’ve decided on a loan, it’s time to apply. Here’s some of the documentation you may need to complete the application:
Once you’ve submitted your documents, the lender will review your application and let you know if you’re approved. With a Citi® Personal Loan, you can receive a response in 60 seconds.
If you’re approved, look at the terms and make sure the loan fits into your budget. Note the monthly payment and any additional fees that might be included.
Once you accept, you’ll receive your loan. With a Citi® Personal Loan, you can get your funds as soon as the same business day when deposited directly to a Citi bank account or within two business days when deposited directly to a non-Citi bank account. Or, you can select to receive a check by mail in approximately 5 business day.
Once approved, Citibank can deposit funds directly into an existing Citibank account the same business day, or within 2 business days when deposited to an external bank account, provided the bank account has not been recently opened. In such instances, Citi reserves the right to reject the bank account as the disbursing account for personal loan funds, and you can select another bank account or select to receive a check by mail, which is delivered generally within 5 business days.
Keep track of your new loan and make your monthly payments on time. Typically, personal loan interest rates are fixed, meaning you’ll likely pay the same amount each month.
A personal loan can be an appealing option for debt consolidation if you’re concerned about handling debt. Combining your debts into one monthly payment may help you keep track of your debt, take control of your budget and provide a longer time frame to pay off your balance. However, a lower interest rate is not guaranteed, and there may be additional fees involved.
Look at your current income, credit score and debt balance to decide if debt consolidation is an option for you. Determine a monthly payment that would work within your budget and a suitable time frame to pay it off. Doing this research before applying may help you understand the right loan terms needed for your finances.
Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi® Personal Loan, apply online today.
This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
