Canadians today are often burdened with an unmanageable amount of debt. In fact, on average Canadians are more than $20,000 in debt, and this is usually owed to several different creditors. With several loan payments due each month on a different day, paying them off can be extremely complicated. However, a debt consolidation loan can get all of these payments rolled into one easy payment, helping you get control of your finances once again.
Here’s an interesting video we found about whether consolidating your debts is really worth it:
Loan Consolidation Companies
Consolidating multiple loans into a single loan used to be ridiculously difficult, involving filing applications with many different banks. The process could take months to complete. Nowadays, though, there are companies that do the work for you. Consolidating your loans is now a simple, easy process. All you need do is fill out a few short forms. The consolidation loan company will draw up a list of consolidation loan offers for you from their network of banks.
Consolidation Loan Benefits
One of the big advantages of these loans is that they help you manage your budget more easily by combining all your individual debts into a single debt, with just one payment due each month.
A second advantage is that these loans usually have a longer repayment term, making for smaller, easier monthly payments.
Furthermore, debt consolidation loans can help you avoid defaulting on your current loans. This can be a life saver for your credit. They will also help you avoid bad credit reports.
Finally, these loans usually have a lower interest rate than your combined interest rates on your old loans. These savings can really add up. If you have debt from multiple sources you can easily pay an interest rate of 29 percent or more.
Between lower principle payments and interest payments, consolidating can save you hundreds of dollars each month.
Consolidation Loan Drawbacks
There is only one significant drawback to debt consolidation loans. However, it can be an important one for some people. These companies are able to offer lower payments because they increase the term. While this provides immediate relief from a high monthly payment, it also increases the total amount paid.
Signs of a Trustworthy Consolidation Company
You should take consolidation loans only from trustworthy, reputable companies. Check the terms and conditions for each company you consider, to make sure that you know what you are getting into. A trustworthy consolidation company should ideally have the following features:
- There are no hidden charges.
- They charge no application fee.
- Their application forms are short and easy.
- Their loan fees that are just about the same as the national average.
- They accept customers with less than excellent credit.
- Their website is well-organized and easy to navigate.
- They have quick, responsive customer service.
Final Thoughts on Consolidating Debt
Take the time to find the consolidation company that best meets both your immediate and long-term needs. If you take care during the consolidation loan selection process, then a debt consolidation loan can be the debt solution you have been looking for.
