Debt Consolidation in Calgary: Your Ultimate Guide
Debt consolidation in Calgary is an increasingly sought-after service. This should come as little surprise, given that Albertan cities are home to Canada’s most consumer debt-ridden citizens. Debt consolidation loans can help you get back on the right track.
Keep reading to learn more about how consolidation loans work and how Alpine Credits makes it easy for homeowners to unlock the best rates on this type of borrowing.
What is Debt Consolidation?
In Calgary, debt consolidation services help you combine your various loan payments. In addition to offering convenience, debt consolidation loans often come at much lower rates than what you’d pay on a credit card.
For example, with a debt consolidation loan from Alpine Credits, you might pay an APR of around 14.66%, whereas average credit card interest rates in Canada are roughly 19%.
That adds up quite quickly. On a five-year $50,000 loan with an APR of 14.66%, you’d pay a total of $14,152.45 in interest, assuming a monthly payment of $1,204. At 19% APR, your total interest jumps all the way up to $27,821.65. Your monthly payment also spikes to $1,297.03.
Non-mortgage debt of this size is not uncommon in Calgary, either. Residents have an average of $29,789 in consumer debt according to Equifax Canada. That’s the highest of any Canadian city.
Given alarming statistics like these, it should be abundantly clear that anyone seeking consolidation loans in Calgary is not alone.
How Debt Consolidation Works with Alpine Credits
At Alpine Credits, our debt consolidation loans help you tap into your home equity.
Calculating your home equity involves taking your home’s value and subtracting the amount you owe on your mortgage.
The result is the amount of money you can access with a home equity loan. From there, you can use the funds to consolidate debt. It’s super simple – and one of the cheapest ways to consolidate debt in Calgary.
Now’s a great time to take advantage of this as well since house valuations in Calgary have risen sharply since COVID-19 wreaked havoc on them in early 2020. If you’ve owned your home for years, you likely have a good deal of equity built up in it.
Whether you’re looking to consolidate $10,000 worth of debt or $500,000, get in touch with Alpine Credits to find out how we can help.
How Our Debt Consolidation Rates Compare to Other Lenders in Calgary
At Alpine Credits, we strive to offer the best interest rates on debt consolidation based on your credit score. Here’s what four other major lenders offer; compare the figures in this chart to the quotes we give you.
|Lender A||$1,000 to $35,000||5.99% to 29.19%|
|Lender B||$500 to $1,000||28% to 32%|
|Lender C||As much as $15,000||12%|
|Lender D||As much as $1,500||15% to 23%|
As you can see, some of the biggest lenders don’t even offer very substantial loans! At Alpine Credits, if you have the equity, we can help you unlock it – whether you need $10,000 or $500,000.
What Debt Qualifies for Consolidation Loans in Calgary?
Calgary debt consolidation services are meant for unsecured debt. This is debt for which you have not put up any collateral. That includes loans such as:
- credit cards
- personal lines of credit
- student loans
- medical bills
- unpaid rent (except in cases where landlords are permitted to place liens)
Types of debt that would not qualify for debt consolidation include:
- car loans
- home equity lines of credit
Practically speaking, you probably wouldn’t want to consolidate those types of debt. Those rates are typically in the low single digits. Mortgage rates, for example, are below 2% on average these days.
Even if your rate was higher when you first received your mortgage, it’d make more financial sense to secure a lower rate come renewal time rather than consolidating the loan.
Benefits of Debt Consolidation
Before we look at how you can secure a debt consolidation loan, let’s discuss the benefits of doing so.
Simplified Debt Repayments
It’s easy to lose track of debt repayments when you have several creditors. Debt consolidation greatly simplifies this, leaving you with a single payment to make each month.
Tackling your debt this way reduces the likelihood of missed payments, helping you maintain your credit score and avoid fees.
A debt consolidation loan from Alpine Credits typically comes with a much lower interest rate than those offered by credit cards and other sources of personal debt. This helps you repay your debt much faster while, of course, saving money.
It’s also important to note that using a home equity loan for debt consolidation will likely be much cheaper than unsecured financing for the same purpose.
Potential Improvements to Your Credit Score
By reducing the likelihood of missed payments and the amount of interest you pay, a debt consolidation loan may improve your credit score. This can be an important remedial step if your current failure to meet obligations has tanked your credit score.
As long as you make your debt consolidation loan payments on time, you’ll see the benefits!
Calgary Debt Consolidation Requirements
Calgary debt consolidation services consider many factors when evaluating your loan.
Your Credit Score
In Canada, lenders typically consider scores above 760 to be excellent. At that level, you shouldn’t have any problems finding a favorable debt consolidation loan. It’s a similar situation with scores as low as 660.
Once you drop below the 660 mark, however, things get tricky. After all, you would have likely ended up with a score that low as a result of consistently-late payments and other negative indicators. None of those factors reflect kindly on your ability to be responsible with debt consolidation services.
That said, there are some debt consolidation lenders in Calgary that do not consider your credit score. At Alpine Credits, for example, we’re primarily concerned about how much equity you have in your home. This makes it possible to receive debt consolidation services with a less-than-ideal credit score.
Debt Service Ratio
Your debt service ratio is an indicator of whether your monthly income is enough for you to comfortably make payments towards your debt.
Say, for instance, that you need to make monthly payments of $2,000 and have an income of $5,000 per month. That would make your debt service ratio 40% as that’s the portion of your paycheck that goes towards making minimum debt repayments.
Ideally, you don’t want your debt service ratio to exceed 35%. Anything higher would suggest you’re in a precarious situation and perhaps even living paycheck to paycheck.
After all, if you’re spending half of your income on minimum debt payments, where’s the money for the mortgage coming from? Calgary’s an affordable city in that regard, but it’s still a lot of money!
Your Available Collateral
Many debt consolidation services in Calgary prioritize applications from borrowers with collateral. Depending on the type of collateral you have, they may even be willing to look past a less-than-stellar credit score.
Collateral ensures the lender will get their money back, no matter what.
How Debt Consolidation Loans in Calgary Affect Your Credit Score
Debt consolidation loans can impact your credit score in several ways. It all comes down to how you use the loan and what your financial circumstances are.
Your score should be influenced positively if you use your debt consolidation loan to get your credit utilization ratio below 30%. For example, if you have $20,000 on your credit card with a $30,000 limit, a debt consolidation loan of $15,000 would get you below the 30% mark and have potential benefits.
The key to debt consolidation, however, is that you make consistent payments on the new loan. If your debt consolidation loan falls into delinquency as well, your credit score will suffer.
It’s also important that you don’t take a debt consolidation loan as a license to start running up your credit cards or personal lines of credit again. This will push your utilization ratio back up and put you right back where you started.
How to Find Good Calgary Debt Consolidation Services
When shopping for a debt consolidation loan, it’s important to choose a reputable company. Below are some tips for finding the right fit.
Check the Better Business Bureau (BBB)
The Better Business Bureau keeps track of a company’s legal status, including any pending regulatory action against it. For optimal safety, you should only work with lenders that are BBB Accredited and have an A+ rating.
Also, be sure to check the lender’s custom reviews as these will give you a good idea of what to expect concerning their financial practices.
Go with a Reputable Name
Major debt consolidation lenders in Calgary have the resources to offer you solid rates and exemplary customer service. This is one of the many advantages of working with Alpine Credits
Compare our rates here to see how we get you a better deal than credit card companies and other online lenders.
Shop Around for a Good Interest Rate
While you may be in a rush to take care of your debt, it doesn’t hurt to shop around if you feel like you could get a better rate.
Lenders don’t all evaluate your application the same way. At Alpine Credits, for instance, we work with homeowners to reach a fair rate.
Frequently Asked Questions
During debt consolidation, you receive a larger sum of money to put towards paying off several smaller loans. This offers convenience by leaving you with one simple payment to make each month. Debt consolidation loans also often come at lower interest rates than credit cards and other types of personal debt.
If you own your home, applying for debt consolidation in Calgary couldn’t be easier. Just get in touch with us at Alpine Credits and we’ll guide you through the process!
If you don’t own your home, you’ll need to get in touch with an online lender that doesn’t require collateral or requires some form that you do have.
To qualify for debt consolidation with Alpine Credits, you need to own your home in Calgary. Broadly speaking, however, you’ll typically need some type of collateral as well as the right types of debt.