How Do Debt Consolidation Loans Help You?
Debt consolidation loans are a debt solution whereby you take out a single loan from one lender to cover all of your existing debt, hence consolidating it into one single monthly repayment. The idea is appealing to many people, and in the right circumstances it can be useful, and can allow you more breathing room to get back on top of your debts.
When Can Debt Consolidation Help?
Debt consolidation is a serious debt solution that should not be taken lightly. If you can conquer your debt with proper budgeting and financial management, then it is advisable to do so, but if you are struggling to keep up with repayments on debt from multiple lenders then it can give you the space that you need. Debt consolidation is most useful when you have high interest debt from several lenders.
A debt consolidation loan does not actually reduce the amount of money that you owe, but it does allow you to secure new terms on the debt, and in the right situation there are several benefits:
Benefits Of Debt Consolidation
- Make Your Finances Simpler: Perhaps the most intrinsically appealing aspect of debt consolidation is that your finances are made simpler. This is not the primary reason why you would consolidate, but the fact that you only owe one lender the money does make repayments much easier to keep up with. You only have to worry about one monthly repayment, and you can put your money into paying one loan off. This makes budgeting and financial planning much easier to deal with.
- Relief From Late Repayment Fees: If you are struggling to keep up with repayments on your existing debt then you will likely be incurring late fees and missed repayment charges. These can deliver a heavy financial blow in a debt situation that is already far from desirable. Debt consolidation allows you to set new terms of repayment based on what you can afford to pay. This might mean you take longer to pay back the loan (according to the minimum repayment plan at least), but you will be granted immediate relief from late fees.
- Credit Score: If you are missing repayments, not only will you incur the late fees, but your credit rating will also be negatively affected. A debt consolidation loan does not in itself effect your credit rating much, but if you consolidate and then make your repayments on time, then you have the opportunity to rebuild it.
- Interest Rates: A lot of the time you will be able to secure lower interest rates on a debt consolidation loan than you currently have on your existing debt, especially if you have high interest credit card debt to deal with. If you can secure lower interest rates, but still take the same amount of time to pay off the loan, then it will be less expensive overall. The other option is to extend the period of repayment, which might be costly, but gives more breathing room.
- Get Back On Top: A debt consolidation loan, while not actually reducing the amount of money that you owe, allows you relief from debt. If used wisely, this gives you the opportunity to recover form your financial setbacks. To get the most out of your consolidation loan, you should aim to manage your finances well, reduce costs, and pay back as much as possible to eliminate the loan quickly.
How To Apply For Debt Consolidation?
A debt consolidation loan may be the perfect debt solution for you, if you are struggling to meet repayments from multiple lenders, and are in a situation which requires immediate debt relief action. Debt Negotiators can assess your situation with a free financial consultation, and can suggest and implement the appropriate course of action to relieve you from debt.