Your Bank is expecting you to come in for a New Year consolidation.
Before you visit your Bank Manager, you should spend some time doing your
own homework. In my (too) many years of representing Consumers to various
lending institutions, I have learned that a loan application properly presented
is half approved.
The Lender will be looking for you to qualify under their debt service
criterium. That's where the Lender takes all your payments on existing
loans, adds the payment on this consolidation loan, plus your rent (or
mortgage payments), as well as your heating component and divides the total
into your proven salaried income to arrive at a payment to income formula.
If that figure is greater than 40%, your loan will probably be rejected.
Knowing that before you start will give you an edge. You can also impress
by doing a "before and after" analysis. Add up all the payments before
this consolidation, and the payments after the consolidation to arrive
at "cash flow" savings analysis. Present yourself (analysis in hand) by
appointment, with all your most recent credit card statements, to the Loan
Manager. If your credit cards are not up-to-date, forego the visit until
you have brought them to current status, you don't want to apply while
your present credit cards are in arrears.
You should also know that the Lender will be looking for security. This
is a car, or a boat, or something tangible. Household goods no longer qualify
as acceptable security. You cannot use RRSP or OHOSP. If you own a home,
you can apply to any Lender for a second mortgage, as long as the "loan
to value" ratio (1st and 2nd mortgage combined divided into the value of
the house) is below 75%. If the percentage is higher than that, your Bank
or Trust Company cannot help you. In that case you should seek the help
of a Mortgage Broker.
The whole idea of a Consolidation loan is to free you from high interest rates on credit cards, and to some extent cash flow relief. Don't lose sight however of next year's dilemma. If you get a new loan over four years, and you start over again next Christmas with new credit card debt, your Banker may not be willing to start over the whole process. In his/her eyes, you have not learned to control spending, which started the whole process in the first place.