What exactly is debt consolidation?
To put it simply, debt consolidation is taking your multiple debts and rolling them into a single loan, which is then subject to a single interest rate and with one single monthly repayment. This way you can deal with one lender, making payment easier while also possibly making less of a payment due to the loan subject to a better interest rate as well as a single interest rate as mentioned above.
Unsecured debts such as credit card debt, personal loans or student loans, are eligible for debt consolidation.
What are the benefits associated with debt consolidation?
One of the biggest benefits of debt consolidation is that you will often be given a lower interest rate than you are currently receiving on your credit card or personal loans which means you could end up with some big savings over the course of the debt consolidation loan.
A single lender will also make payment easier and save you money on fees and late payments.
When to consider looking into a debt consolidation loan
If you’re experiencing any of the following you may want to look into talking to us about debt consolidation and how we can help.
Are you struggling to make monthly payments because your debts are to close to your credit card limits?
Do you have defaults on your credit report?
Do you have an available credit card limit with a low interest rate?
Do you have equity in your home?
Do you have low interest rate credit cards and personal loans now?
Will debt consolidation affect my credit score?
Debt consolidation won’t immediately affect your credit score and could also actually have a positive effect long term if you maintain your repayments to the consolidated debt loan. It will also make it easier to avoid payment defaults which do have a negative impact on your credit score due to it being one easy monthly repayment that we will make sure meets your budget.
One consideration is that you should be aware of is that applying for multiple debt consolidation loans and being rejected could have a negative effect on your score and you be certain that you will be successful when applying for a loan in this regard. But that’s why we are here, to help you through the process.