How will debt consolidation help you with your debt and also reduce your debt?
You may be in need of some debt help if you are having a difficult time making all of your payments, if you are only making minimum payments and not paying down any of your principle, or if you just feel like your debt is consuming you. If you have multiple consumer debts, a consolidation loan may be an option that could work for you. Today I will explain how consolidating your debts into one loan can be beneficial in paying off your debt.
What is a consolidation loan?
Firstly a consolidation loan is a loan taken out at a financial institution or bank that initially pays off all of your outstanding consumer debts such as credit cards, a line of credit, pay day loans etc.
A consolidation loan will often have a lower interest rate than credit cards or payday loans so you can reduce your debt simply by changing the form of your debt. For an example, if you have 2 credit cards that you are making minimum payments on and you are paying 19% interest, you will be saving 14% in interest on each card in by grouping the 2 credit cards into one loan that charges 5% interest. Therefore, more of your money will go towards paying down the principle balance and it can make it possible to reduce the total amount of money you pay back to your creditor.
A Consolidation Loan can simplify your debt
If you have a lot of different payments to make in a month and you find yourself missing payments or just being stressed about paying them on time, then a consolidation loan will help simplify your debt repayment plan. If you aren’t an organized person, making one monthly payment will work much better for you than making 4 or 5 payments to different financial institutions.
However, if your credit rating is low you may not be able to qualify for a consolidation loan. In this case give us a call at 4 Pillars Winnipeg and set up a free consultation with our Winnipeg Debt Relief Specialist, David, who will help you look into other options.
