If you have found yourself sinking into a quicksand of debt, you could possibly get relief through a debt consolidation loan. There are a number of banks and credit unions that offer this type of loan. As you might guess, not all financial institutions provide exactly the same kind of debt consolidation loan at the same terms.
What is an unsecured debt consolidation loan?
An unsecured debt consolidation loan is where you are not required to put up any asset to “collateralize” it. In comparison, a secured loan requires you to put up some asset to secure it, which may be your house.
This means that to qualify for a secured home loan, you’ll have to have enough equity in your house to serve as collateral or will have to have another asset such as a boat or second home you can use to secure the loan.
A personal loan
While Citibank offers a variety of home loan programs, it has only one type of unsecured debt consolidation loan, and that is a personal bank loan. This loan can be used to consolidate all your debts, leaving you with just one monthly payment versus the four, five or even more payments you may now be making.
Not everyone qualifies
If you choose an unsecured personal loan from Citibank, you will need to be at least 18 years old, have a valid Social Security Number, a current driver’s license or some other ID card that shows a home address within the US. You will also need to have a good credit score and earnings and references that can be verified.
There us a “Catch 22” to a personal loan, which is the deeper you are in debt and the more you need the loan, the less likely it is that you can get one – unless you’re willing to pay an outrageously high interest rate.
How to get an unsecured loan from Citibank
You can apply for a personal loan from Citibank either in person at your local Citibank Financial Center or online at Citibank’s website http://www.citibank.com/. You can also apply for one of these loans on the telephone.
The application process is not very difficult and in most cases you will have the money within a couple of days. The good news is that the moment your funds become available, you will be able to immediately pay off all those crushing credit card debts.
The benefits of a debt consolidation loan
There are several important benefits to a debt consolidation loan. For one thing, you will probably be able to lower your payments as these loans generally come with a much lower interest rate than your other debts – especially credit card debts. While credit cards can have interest rates as high as 18% to 20%, you probably could get a personal loan from Citibank for half that amount or even better.
Second, you will be able to stretch out your payments over more years. In the case of credit card debt, you’ll probably need to pay off those cards within two to three years. However, with Citibank, you should have as many as five to seven years to pay off that personal loan.
A word of warning
It’s important to understand that if you are late with your monthly payments to Citibank or if you cannot pay back the loan, this will be reported to the three credit bureaus. This kind of information will seriously affect your credit rating, making it difficult for you to get financing from any other loan provider. And if you default on your loan from Citibank, you may have to pay late costs, collection costs, and other penalties.
