A common piece of advice you may hear from friends and family members in Victoria is that you cannot get a consolidation loan unless you have good credit. In other words, if you have fair credit or a low credit score, taking out a loan to pay off high interest debt and make one lower interest rate monthly payment is not an option.
This is simply not the truth. In fact, there are several lenders in and around the Victoria area that provide consolidation loans for bad credit. There are requirements to meet the lender’s approval limits, but many individuals and couples are pleasantly surprised to find out their lower credit score is not the obstacle they thought it might be in the process.
What To Consider
Generally, lenders offering consolidation loans for bad credit charge slightly higher interest rates. This is due to the higher level of risk the lender is taking in approving the loan.
However, the interest rate on consolidation loans for bad credit is typically lower than the elevated interest rates on credit cards and other types of unsecured debt. It will be important to do the math and to consider any fees or costs associated with the loan in determining if it is cost effective in your specific situation.
It is also possible that an individual may be able to pay off the consolidation loan early, helping to reduce the amount of interest paid over the term of the loan. This is often the case if the individual has returned to work or has increased their income through a second job or moving from part to full-time employment.
