Due to the present credit and lending crisis in the sub prime industry in the United States, as well as the greater financial markets controversy about sub prime lending, their has been a change in the lending environment. There have been indications of credit restrictions in world financial markets, and notable changes in lending policies in Australia. Numerous borrowers are paying higher prices for their loans and being forced to cut back on their budget. Increased numbers of borrowers are being forced to file bankruptcy. Many sub prime lenders are closing, and others are being bought out. How does this impact people requiring a Debt Consolidation Loan?

A debt consolidation loan is a kind of loan that is offered to individuals who have multiple loans or debts they wish to consolidate into one larger loan. They may have good credit or less than perfect or bad credit. With the United States in the midst of this crisis and investors more prudent with the funds they are offering, there is less credit available on the market and the credit that is available requires tighter policies to lend. For the borrower it simply means there are less solutions available for the same situations that were occurring 6 – 12 months ago.

It is common place to be in debt, most of us have loans and all of us have utility bills and other types of debt . The issues with funding are high-lighted when we find ourselves under financial stress. A missed payment on a loan or a minor paid credit default such a utility bill can hinder our chances of obtaining a debt consolidation loan or any other form of loan. It can even happen to some of the most responsible individuals who have been caught out by the rising cost of loans and obtaining finance.

If you have a bad credit score it should not feel like the end of the world, but to some people it may seem just that. Bad credit can be a problem when looking for a debt consolidation loan or other loans, and will generally require the services of a professional loan or mortgage broker to source appropriate finance. There are a number of issues in obtaining finance in these situations, some are listed below:

1. Lenders tightening policies for people with Credit defaults.

2. Reduced LVR (Loan to Value of Property ratio) ratios on loans.

3. Increased Interest Rates

4. Increased Fees

5. Tighter Servicing Criteria – Lenders offering you less money for your same available income.

Even though there are these issues to overcome, obtaining a debt consolidation loan would not only help individuals financially, but it can also help to repair their credit score as well. There are a few factors that help determine an approval of the loan, such as:

1. The Lender you have submitted your application to.

2. The conduct of the debts being consolidated.

3. The total loan size.

4. The type of security offered.

5. Ratio of the loan to the value of the security (LVR Ratio)

6. Status of employment

7. Current financial situation

8. Credit scores.

The Interest rates and fees on loans for debt consolidation vary considerably based on the level of credit impairment, LVR Ratio, risk insurance required by the lender, and many other factors.

If you are in the market for a debt consolidation loan, there is an ever shrinking number of lenders from which you can choose, especially if you have credit issues. There are still loans available for Credit Impaired borrowers, though there is now a definite need for specialists that can assist with your needs. The credit crisis has highlighted the need for qualified Bad Credit and Debt Consolidation Specialists in these fields.