DEBT CONSOLIDATION LOANS IN 4 EASY STEPS
DEBT CONSOLIDATION LOANS: APPLICATION REQUIREMENTS
DEBT CONSOLIDATION LOANS TO CONSOLIDATE YOUR DEBTS
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Debt consolidation loans can help you to manage your debt and make your monthly repayments simpler. Managing our finances effectively is quite possibly the most challenging aspect of everyday living. Generally speaking, this comes down to our general culture in Canada, where we want to have so many things almost immediately when we want it and look for all the avenues possible to attain them. Often this means we have to borrow to acquire these things. This results in considerable debt for many people as money is borrowed to meet these needs.
What can make debt overwhelming is when you borrow from a multiple of lenders and you have to make several different payments to each of them. This means that you have a myriad of loans that you are paying back each month. These loans could include credit cards, payday loans, personal loans, car loans, bills and so much more. The result is feeling swamped and overwhelmed with monthly payments. One excellent option that you can explore to manage the situation is to get a debt consolidation loan. A debt consolidation loan is borrowing enough money from one lender to pay off all other loans you have so that you have only one simple payment to make to one lender.
Types of Debt Consolidation Loans in Canada
Personal debt management in Canada falls into three main types of categories, all of which are long term and help to manage debt effectively. These include Debt Consolidation Loans, Debt Management plans, and Debt Settlement plans.
Debt Management Plan
With a debt management plan, the person who is in debt will have a credit counseling session with a personal debt management agency to help establish the amount of money they can afford to pay on a monthly basis. The agency they are dealing with will then find a lower interest rate loan from creditors they work with to bring down monthly payments, much more in line with what the person can afford. Such an arrangement also helps to eliminate late fees and make the whole loan much more affordable. With a well worked out plan, it is possible to repay all the debt within 3-5 years without issue.
A Debt Consolidation Loan
There are two approaches to debt consolidation. The first and most obvious one is getting a debt consolidation loan to pay off all other creditors you owe money to. This approach does not have to involve an agency or any person. You can apply for the loan yourself. The second approach involves using an agency to make payments to all your creditors. You will make one payment to the agency and the agency will distribute the money to all your creditors in accordance with a prior agreement with the creditors.
This makes it possible for you to make a range of payments to different creditors using one agency or lender and one payment. Often the agency is able to arrange for lower payments than you will make if you were paying the creditors directly. These types of loans will typically have a fixed interest rate, and their main benefit is that the aggregate interest rate payable will be lower than what you would be paying for all your other loans individually. This makes it easier for you to complete your payments, or even spread them out so you have more time to pay. Some of the debt consolidation loans you will come across include personal loans, equity loans, consolidating student loans and zero interest balance transfers.
These types of loans will typically have a fixed interest rate, and their main benefit is that the interest rate will be lower than what you would be paying for all your other loans. This makes it easier for you to complete paying all the loans in full. Some of the debt consolidation loans you will come across include personal loans, equity loans, consolidating student loans and zero interest balance transfers.
Debt Settlement Plan
Debt Settlement is the third method to explore, and perhaps the one that has the most drawbacks. Usually, this method will entail a debt settlement company negotiating to make a lump sum payment with each of your creditors for an amount that is lower than what you may owe then. The main disadvantage of this option is the negative effect that this will have on your credit score. You may find that you need to go for several years without any access to credit.
The Appeal of Debt Consolidation Loans in Canada
Debt consolidation means that you take out a new credit to help you pay off all your existing credit. The reason that it becomes such a viable option is that overall, you should be able to bring down the interest rate on your debt as well as bring down the amount that you need to pay each month. Furthermore, rather than trying to pay numerous parties, you will only have to pay one company. The final appeal of debt consolidations is in regards to your credit score. When you are only managing one loan in comparison to several, then it becomes easier for you to protect your credit score which can be of great benefit in future.
What to Consider When Going for Debt Consolidation Loans
A debt consolidation loan may just be the answer you are looking for to help you manage your debt problems. However, you may find that sometimes this does not offer a long-term solution and you can easily mess up again. After the debt is consolidated and you have lower monthly payments, there is the temptation to go for more loans, thus bringing you right back to where you started in the first place.
In order to manage debt and stay out of debt, you cannot simply look at what is happening on the surface, you need to dig deeper to help you understand how you got into debt in the first place. Yes, debt consolidation loan in Canada will help you get back to the drawing board and start with a clean slate. However, for long-term financial health, ensure that you manage the habit or behavior that resulted in your getting into debt in the first place.
A Draw Back to Debt Consolidation Arrangement
In order to keep down the monthly payments, sometimes the agencies arrange for you to pay off the loan over a longer period of time. Depending on the rate of interest you pay, you may find that in the long term you pay back much more with this type of loan than you would have with the original loan.
Getting a Debt Consolidation Loan
There are numerous avenues that you can explore in order to get a consolidation loan. To begin with, you should speak to your bank to find out what they can offer you, and compare this with what you can get from a credit union. If these are not an option, you will find that there are online lending sites that can help you get the loan that you need. Then, you should determine which of your loans you want to consolidate, the interest rate and monthly payment. Find out what the possible fees for taking the loan may be and this way, you will be able to make an informed decision that will work to your benefit.
Debt consolidation loans in Canada are an excellent way for anyone who is looking to manage their debt, especially when facing debt problems. They help bring down the debt and if you go through a credit counseling you learn how to manage your money better in future.
With debt consolidation loans, what previously may have involved five to ten cheques, may be settled with just one. Although there are certain disadvantages, such as paying back the loan for a longer period of time, there is also the benefit that you will be able to make a smaller overall payment. This will help your credit score so that in the event you need another loan or access to credit in the future, you should be able to get one with some ease.
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We are committed to provide best customer experience possible. Currently we offer personal term loans in Ontario, Alberta and Newfoundland, but do check back with us soon, as we are working on expanding our reach to other provinces and territories.