Digital News Report – Low interest rates and high personal debt are prompting many Americans to seek debt consolidation loans. According to data collected by Government Service Enterprises, interest rates are at historic lows.
The Federal Reserve reported last week that consumer credit is on the rise. After eight straight months of declining consumer credit, September saw a rise of 1.15 percent.
But there is a problem: People will bad credit may have trouble qualifying for the low rates. Your interest rate will depend on your credit score.
There are two types of debt consolidation loans: Secured and unsecured. Borrowers may receive a lower rate with a secured loan, but these loans require more paperwork and collateral.
SunTrust bank says that CDs, boats and cars can be used as collateral. It may help to place a deposit with the bank. “You may be eligible to receive up to a 0.75% interest rate discount based on your SunTrust relationship”, the bank said.
U.S. Bank also offers personal unsecured loans. The rate will depend on the credit score and loan amount. “No collateral required,” the bank said in a statement. You can receive your money within 48 hours.
The federal government says that consumers should check their credit history before applying for a loan. Whether you are trying to qualify for a debt consolidation loan, student loan, car loan or other personal loan, “higher scores mean you are more likely to be approved and pay a lower interest rate on new credit”, the Federal Deposit Insurance Corporations (FDIC) said in a statement. If there are mistakes on your credit record, it might pay to contest them before applying for the loan.
By: Tina Brown