Debt consolidation in Edmonton: Your complete guide
In Edmonton, debt consolidation has become increasingly popular. After all, Edmonton is one of two major cities in Alberta, which outranks all other Canadian provinces when it comes to consumer debt.
Debt consolidation in Edmonton isn’t always cheap, making many of these loans questionable solutions for those who live there. Keep reading to learn more about debt consolidation loans in Edmonton and how Alpine Credits has been helping locals find much better rates for more than 50 years.
An overview of debt consolidation
Debt consolidation is a fairly simple concept. It involves combining multiple small debts into a single larger loan.
People often seek out debt consolidation loans as a means of lowering the effective interest rate on their debt. For example, if your current creditors are unwilling to give you better interest rates despite improvements to your credit rating, you could simply get a brand new loan at a better rate and pay those other debts off immediately. You’d then be left with a lower interest loan to pay.
More common, though, is that people seek debt consolidation loans to make their financial burden more manageable. Debt consolidation leaves you with a single monthly payment to remember, which may help you avoid falling behind and the many issues accompanying that.
How debt consolidation works with Alpine Credits
The problem with many debt consolidation loans in Edmonton is that they’re unsecured, much like the original loans people typically seek to consolidate. This translates to more risk for the debt consolidation lender and a higher interest rate for you.
That’s where Alpine Credits comes in. We help people in Edmonton unlock equity in their homes, which they can use to pay off high-interest, unsecured loans such as credit cards.
Calculating your home equity is simple.
As long as the amount of money you’re seeking for a debt consolidation loan exists in the form of home equity, Alpine Credits can help. To learn more, get in touch with us.
How Our Debt Consolidation Loans Compare to Others in Edmonton
Because our debt consolidation loans are secured, we’re less concerned about your credit score than most other lenders in Edmonton would be. As a result, our loans are more substantial, and come with better interest rates than you’d typically find elsewhere.
See the chart below for figures from four major debt consolidation providers in Alberta.
|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%|
Next, visit this page to learn more about our interest rates and how they compare. Keep in mind, receiving approval for our debt consolidation loans is typically a much easier process than you’d find with other lenders.
We also offer more substantial debt consolidation loans ranging from $10,000 to $500,000, whereas the lenders referenced above put caps well below $40,000.
Which loans qualify for debt consolidation in Edmonton?
Traditional debt consolidation lenders gear their services towards unsecured debt, including personal lines of credit, student loans, and credit cards. They often don’t allow you to consolidate secured debt such as an investment property mortgage or a car loan.
Part of the rationale for excluding these loans from consolidation is that they usually come with lower interest rates anyway. In other words, many people have no incentive to consolidate those loans.
However, at Alpine Credits, we understand that everyone’s financial situation is unique. As long as you have equity in your home, we can help you consolidate any type of debt, whether secured or unsecured.
How traditional debt consolidation providers in Edmonton evaluate applications
Traditional providers of debt consolidation loans in Edmonton evaluate much more than the types of debt you have. Below are the other factors they look at.
Your credit report
What many Canadians don’t realize is that your credit score itself is not the only factor that determines whether or not you’re approved for a loan. In fact, the credit score you see on reporting sites often differs drastically from what lenders actually see on their end, according to Equifax Canada.
Of greater importance is what lies in your credit report, which may actually result in a poorer evaluation of your financial situation than you might think.
For example, lenders may look at the types of loans you have along with how long it took you to accrue the debt and whether you’ve ever deferred payments.
This is why traditional debt consolidation loans are often such bad deals. If you’re looking to consolidate debt out of necessity, you may have some indicator of financial difficulties in your credit report that result in a high interest rate.
Economic conditions also play a role in determining the amount of risk lenders are willing to take, which can impact your likelihood of getting approved.
For example, prior to COVID-19, it was fairly easy to get a loan as long as you had a good credit score. Even mortgage lenders have clammed up, though, which took many by surprise given that property can always be repossessed.
This leaves people looking to consolidate debt and relieve financial pressure in a tight spot. Home equity loans are much easier to get in these situations since you’re essentially borrowing from yourself by tapping into equity. It’s really your money; companies like Alpine Credits simply help you unlock it without selling your home.
Your Debt Service Ratio
Your debt service ratio indicates the percentage of your monthly income that goes towards repaying loans.
Lenders generally shy away from anyone spending more than 35% of their income repaying debt since this likely means they’re overextended and a simple emergency might push them over the edge.
Once again, however, with a debt consolidation loan from Alpine Credits, you’re essentially borrowing from yourself, which allows us to have more relaxed lending standards.
How to find good debt consolidation loans in Edmonton
Now that you know more about how debt consolidation loans work, here are some tips for finding good lenders in Edmonton.
Choose a Reputable Company
Don’t risk borrowing from shady lenders simply because you think you have little chance of being approved elsewhere. Such companies pray on these types of borrowers, slapping them with exorbitant interest rates and unethical business practices.
By choosing a reputable lender like Alpine Credits, you can enjoy competitive interest rates and the confidence that comes from dealing with an ethical company.
One good way to judge a debt consolidation lender is to look them up on the Better Business Bureau website. Alpine Credits, for example, has an A+ rating on the site, which the Better Business Bureau determined as appropriate based on our customer reviews and overall reputation in Canada.
Prioritize Low Interest Rates
If your reason for getting a debt consolidation loan in Edmonton is to get your financial burdens under control, securing a low interest rate will be of major help. Part of what makes debt so devastating is compound interest’s impact on the balance.
Home equity loans come with some of the best interest rates out there, making them very popular for this purpose.
Frequently asked questions
As with any loan, debt consolidation may result in a temporary hit to your credit score. This is in part because taking out a new loan and using it to pay off older ones lowers your average account age. Consequently, a shorter credit history can result in a lower score.
However, a debt consolidation loan can help your credit score in the long run if it makes your finances more manageable. This is often more than worth the initial dip, which is only temporary anyway.
If you’re a homeowner, tapping into your home equity is a great way to consolidate debt. You’re borrowing from yourself, which comes with a lower interest rate. However, there are many factors that determine the “best” debt consolidation loan for you. Contact an Alpine Credits advisor to learn more.
Alpine Credits is the most reputable debt consolidation company for homeowners in Canada given our 50-year history providing quality home equity loans.
Most major Canadian banks do not offer dedicated debt consolidation loans. You can use personal lines of credit for the same purpose but these are typically much lower amounts. Additionally, lines of credit can be tricky to manage since they revolve, meaning you’re allowed to make a payment and then borrow directly from the account again.
This isn’t necessarily a wise feature to have if you’ve had difficulty managing debt in the past.