It’s so easy to get overwhelmed by debt, especially f you’re a young adult out there and are just starting off. If you’ve graduated and your student loan grace period has ended, there’s a good chance you’re panicking about paying your loans back.
Combined with other debts you might have like a car loan and credit card debt, it’s easy to see only red on your balance sheet. Debt consolidation loans in Ontario and other provinces can help with your specific situation by making your debt understandable and easily manageable.
What Are Debt Consolidation Loans?
Unfortunately, no one is going to pay off your debts for you. A debt consolidation loan is simply a way to combine all of your existing debts under one umbrella. Rather than worry about credit card payments, car payments, and automatic student loan withdrawals, everything gets grouped together so you only make one monthly payment towards your entire debt.
Why Debt Consolidation Loans Are Helpful
- One Monthly Payment – For anyone who feels like they’re drowning in debt, reducing all of that paperwork, confusion, and stress to one single payment can be a huge relief.
- Lower Your Interest Rates – Half the problem with dealing with multiple loans is the wide range of interest rates. Your credit card balance might be relatively small, but the high interest rates can be frustrating. A debt consolidation loan may be able to lower your total interest rate, thereby reducing the total amount of money you’ll pay in the end.
- Lower Monthly Payments – Having a single bill or multiple bills doesn’t really matter if you can’t afford any of them. Your debt consolidation lender will be able to determine a monthly payment that works with your budget. With this system you’ll not only be able to pay off your debts, but you should even be able to set aside a bit of money for an emergency fund or other savings.
- Eliminate Calls From Creditors – There’s nothing worse than feeling harassed by creditors who are trying to force you to pay when you don’t have any money. With debt consolidation, you don’t have to deal with creditors anymore. They’ll be paid on time via your monthly payment, and you’ll never have to worry about dodging their calls again.
The Danger Of Consolidation Loans
By effectively lowering the interest rate and monthly payment of your debts, it may take longer to pay off your debts than it would have otherwise. Taking longer means you may ultimately pay more in interest charges than you would have if you’d paid each debt back separately. You’ll have to decide what’s best for you. If you think you can control your budget and pay everything back separately, you may end up paying a bit less and completing your payback faster without the debt consolidation loan. Learn more at Debt.ca. If, on the other hand, you’re struggling to make things work at all, debt consolidation may be the best answer to get you back on track towards a responsible, debt-free lifestyle. It should be noted that this financial strategy only helps with repaying your debt, it isn’t a cure-all. Many people don’t realize that after they’ve consolidated their loans and begun paying them back, they shouldn’t simply go and re-fill their high-interest credit cards again! Changing your overall behavior is just as important as using effective financial techniques to cut down on the time you’ll have a loan for, and consequently, the interest that you will pay.