Whenever people begin experiencing financial difficulty, they mostly look for debt consolidation loans for help and as a way to solve the debt ridden problems they are actually in. they mainly work on that as an effort for lowering interest rates and combining all payments right into one manageable monthly scale. The same goes for the people associated with the fashion industry. Opening a boutique or organizing a fashion show is not that simple and calls for a lot of money. It might take some help and people will always head towards loan to get the journey started. Unfortunately, if the journey does not take a high fly, things might go out of hand. You might get into debt, and for that help, you need debt consolidation loan for a change.
Combining all forms of loan under one head is a good idea for some people. But, getting hands on debt consolidation loan is not that simple as most people think of it. There are some reasons when people in the fashion industry might get declined for the debt consolidation loans. After finding out those reasons, you can work your way out for getting the loan request approved the next time. For that, going through some simple reviews might help you in the long run to make the right decision.
No security designed for the debt consolidation loan:
Financial institutions are always asking for collateral or security while applying for the debt consolidation loan, mainly when somebody is having any difficulty in just managing all of these payments. They might even want to ensure that no matter what happens, they will always get the money back that they once lent out to the borrower.
- So, what will happen if you don’t have anything to work as collateral? Most of the people will resort to using credit card for paying off debts at 20% interest rate.
- Others will just apply for unsecured loan from financial firms at 30% rates or higher.
- But in case, you are planning to reduce debts, these routes might not get you anywhere as a large portion of debt payment will go under interest any anything barely will remain to principle.
When you have issues with credit score or report:
There are multiple issues revolving around credit score and credit report, which can actually prevent people from being approved for any of the debt consolidation loans. Any one of the late debt payments or even debts in collections will often hurt the credit score of the people in question. Some of the high balances owning can further compound the issue. With multiple variables in hand, it is always best to just read through detailed explanation of ways in which credit score is mainly calculated.
Not quite enough money to qualify as debt loan:
Most of the time, debt loan payment might cost you more every month than just paying minimum payments on the said credit cards. By the time anyone realizes that they might benefit from consolidated loan, they might be able to make minimum payments on credit cards and not any single penny extra.
- The minimum payments of credit card are so low that it might take number of decades in paying off the credit card balance. It is only if you stop using the cards while making the further payments in near future.
- Consolidation loans cannot be just paid off over longer time frame unless they are well secured by home. It can often prove to be a second mortgage.
- Consolidated forms of loans are mainly amortized over a period of 3 to 5 years. It means that the payments will have high enough money for paying loan off in around 3 to 5 years’ time.
- In case, the income you are dealing with failed to handle such payment, then you are actually declining any consolidated loan over here.
In Canada there is not enough credit history:
The credit history you are dealing with will show the proper use of credit in Canada. Most of the people, who actually apply for the current debt consolidation loans, will have not being using credit in own name for quite a long time. It can always take time for a stronger credit report score for developing so that you do not have to deal with longer credit history to work just against you.
- Another aspect to this section is to have credit available that you generally do not use that often. In case, you have credit card just tucked away for any sake keeping, you might need to use it properly and responsibly for building a stronger credit history.
- Just having it will not show that you know ways to use it properly and in a responsible manner for sure.
- In case, you are a joint party on a loan, always remember that some financial institutions will only report information about primary borrower, and not quite related to co-signers or secondary borrowers.
- In case, you are planning to check out or look at the ways in which credit history looks like, then you can request it for free from Trans Union or Equifax.
Way too much into debt:
Credit unions and banks are always allowing you to borrow a sum of around 40% of gross annual income for covering the debt consolidation loan right now. It means that if you are asking any banking institution for loan, on paper they might add the proposed loan to current debt payments. These payments are on existing loans, line of credit, credit card or mortgage, just to see if that exceed the benchmark of 40% of the income. In case, the new loans are putting you over 40%, then you might consider applying for smaller loan or no loan.
These five reasons might force people to not get debt consolidation loan even if they want to, and even if they are associated with the fashion world or any other industrial niche.