Debt consolidation

A debt consolidation loan, when possible, is the best way to maintain a good credit record. At Groupe Nantel, we can help you find your best solution to solve your debt problems.

Couple preparing for a Debt consolidation

What is
a debt consolidation?

This debt relief solution usually refers to a consolidation loan to combine several debts into one. The main objectives of a consolidation loan include having only one debt payment per month and reducing the average interest rate. The interest cost reduction will help you improve your financial situation.

A debt consolidation loan is usually with a financial institution. Some lenders may require you to have an endorser or co-borrower to reduce their risk or even ask to have the loan secured by an asset, in the form of a second mortgage on your residence.

What are the advantages?

  • By avoiding filing for bankruptcy and a consumer proposal, your credit score will remain higher.
  • If you have sufficient equity in a property, you could obtain a competitive interest rate by either refinancing your property to pay off the unsecured debts or consolidating your debts with a second mortgage. 
  • It will be easier in the future to be approved for a mortgage or vehicle loan.

What are the steps?

  • Initial Assessment: During the initial assessment of your financial situation including a discussion about the advantages and obligations of the different debt relief solutions, we may conclude the debt consolidation should be tried first.
  • Financial professional: If you have a property, it would be relevant to consult with a mortgage broker to assess the possibilities of a mortgage refinancing or securing a second mortgage.  Alternatively, it may be best to meet a financial advisor at your main financial institution to apply for a consolidation loan.
  • Other solutions remain available: If the consolidation loan is not successful, you can contact us to re-examine the other solutions.

Additional info about debt consolidation.

Make a budget over a period of one to five years to show that you have enough financial capacity to meet the repayment agreement. Be sure to take into account irregular and unforeseen expenses.

If you are being presented with  an interest rate exceeding 14%, or if a co-borrower is required for the approval of the consolidation loan, you may want to consult a licensed insolvency trustee or financial advisor before accepting.

FAQ on debt consolidation.

Our advisors at Groupe Nantel are here to help you find solutions and be debt free.

Make sure your credit file is good enough to be able to successfully negotiate a debt consolidation loan agreement with a reasonable interest rate. You may ask a financial advisor or account manager at your financial institution what criteria will be considered to approve your consolidation loan application and if your file seems adequate. Don’t forget in the event you apply for a consolidation loan and you are declined, this will negatively impact your credit file.

Before you go to the financial institution to apply for a debt consolidation loan, make sure you are well prepared. Ensure that your debt ratio is below the financial institution’s limit. Look at your credit file and correct any errors you may find and ensure there is enough time for the corrections to your credit file to be updated before your credit file gets reviewed. Prepare a monthly budget and assess what is your financial capacity to meet the repayment agreement. Make sure that your employment history is sufficient to meet the financial institution’s criteria, alternatively you may need a co-borrower or endorser.

Generally speaking, the lender you owe the most money to will be the most willing to give you an unsecured debt consolidation loan. It is also likely that this lender will only agree to consolidate the debts with this financial institution. In this case, this option may not solve your debt problem.

If you have many small loans with multiple lenders, it is unlikely that a financial institution will grant you a consolidation loan unless you have a co-borrower or endorser.

If the financial institution has refused to grant you a consolidation loan, we invite you to consult with us to assess your financial situation. We will discuss the other options available to you. In addition, we will be able to evaluate the possibility for you to use the consumer proposal.

One of the objectives of the debt consolidation is to reduce your average interest rate. In most cases we would not recommend a consolidation loan with interest exceeding 20%. If you have a good credit profile and stable employment, the interest on the consolidation loan should vary between 8% and 14% with a financial institution. If you contact a specialized financing company or try to find a personal loan, the rates could be much higher.

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Your financial fresh start
begins today.

Our advisors at Groupe Nantel are here to help you find solutions and be debt free.