There are many nonprofit debt consolidation loans available and many people choose this type of loan above others. If you have a lot of small bills that you are paying off every month, a debt consolidation loan could be the answer. You take out one loan that pays off all of your other debts, so you only have one repayment to make each month. It is much easier to budget and to remember the payments. Often it can work out cheaper too.
Not for profit loans are available from credit unions. These are co-operative associations owned by all of their members. This is different from other financial institutions such as banks which are owned by shareholders.
The first place that most people try for a loan would be a bank or finance company that you already do business with. If you have had a checking or savings account with a bank for a number of years, they are likely to feel better about lending to you because they can look back and see exactly what has been happening in your account.
However, credit unions can be a better option because they can often offer you more choices. They work through a different set of laws and regulations than those applying to banks, and they also have a different approach. You are more likely to get personal advice that will consider all aspects of your financial situation from a credit union. The interest rate is often lower too.
In a credit union, some members save and put their money into the credit union. Other members need to borrow and they take money out. The interest that they repay (after administration costs) goes to the members who have saving accounts, as the interest on their savings.
In the USA, credit unions are regulated by the Credit Union National Association, or CUNA. Credit unions have a 'field of association' which is the definition of people that they will lend to. They are not open to everyone. They might only take members from a certain geographical area, church, school or employer. In order to join a credit union so that you can save or borrow with them, you need to be in the 'field of association' for that CU. You can search CUNA's database to locate a credit union: http://www.creditunion.coop/cu_locator/index.html
When you find a credit union that will accept you, you also need to know if they offer debt consolidation loans. Then get a quote.
It is quite simple to figure out whether the loan will make you better off financially. One way is to look at the interest rate and compare it to the interest rates of your various small debts. If it is lower than most of the other balances that you owe, it will probably be a good deal for you. Or you can make an application or ask for a quote. Then check that the monthly payment that they quote you is less than the total of all the payments you are making right now.
Usually, the loans offered by credit unions have more favorable terms than a bank loan. Most people who are eligible would recommend nonprofit debt consolidation loans over loans from other financial institutions.
