Many Canadians struggle with excessive debt and have to pay numerous creditors each month. However, for those looking to reduce their monthly debt payments, debt consolidation loans may be a good option.
What Are The Loans For Debt Consolidation
The purpose of these loans is to combine several high-interest loans into a single, manageable debt amount with a lower interest rate. Consolidating debt can help to simplify your finances by replacing multiple bills with one low monthly payment. It also helps to reduce pressure on the consumer, as it will stop telephone calls from creditors and debt collectors who are looking for their money.
What Are The Benefits Of Debt Consolidation?
Debt consolidation allows you to roll your debts in one monthly payment, so that you don’t have to worry about making payments to several different creditors. This lessens the chances that you will fall behind in your payments or forget to pay a creditor, which can negatively impact your credit score.
Consolidating debts also lowers the interest rate that you have to pay, as debt consolidation companies normally charge lower rates than credit companies or banks. Paying lower interest rates helps you to free up money so that you can pay off your loans sooner or use the money for other expenses.
Another benefit to debt consolidation is that your monthly payments will be lower, as most programs offer you the option of a longer period for repayment. With debt consolidation, creditors are paid promptly, which will protect your credit rating from being affected by late payments.
What Debts Are Eligible for Consolidation?
There are certain types of debt that are eligible to be consolidated;
- Consumer loans
- Credit cards debt
- Public utility bills (such as for electricity and telephone service).
However, mortgage debt may not be included in consolidation programs and must be managed separately. Consumers who are interested in consolidating their debts should create a list of all of their current debts and then contact an experienced credit counsellor who is familiar with debt consolidation Canada programs.
The counsellor can help you figure out if consolidation will benefit you.