Debt Consolidation 101: A Short Guide
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Debt Consolidation 101: A Short Guide
People can fall behind on their payments for lots of reasons. A loss of income, an unanticipated expense, or a medical emergency are but some of the curveballs that life sometimes throws our way that can put people in a precarious financial situation.
Any one of these events could lead someone to miss payments or get caught in a vicious debt cycle. Whether you’ve fallen into debt due to a shortfall in income or because high interest rates and excessive fees have made your debts impossible to manage, consolidating your debt can save you a lot of time, money and hassle.
The Hidden Costs of Carrying Debt
Carrying the burden of large debts can negatively affect you in a number of ways.
First and foremost, it hurts your bottom line. Interest charges and fees add up, so large debts end up costing you a whole lot more than the principal amount over time. These added costs are why so many people struggle to free themselves from the debt cycle. Unpaid debts eat away at your disposable income and make it harder to manage your budget.
Another negative impact of carrying debt that is rarely talked about is the psychological toll it can take on you and your family. In recent years, more and more studies have shown that people who struggle with debt report higher stress levels and increased anxiety, which can be detrimental to your physical health as well as your mental health.
Luckily, there is a way to help manage the situation and simplify your life. It is a process called debt consolidation.
What is Debt Consolidation?
Put simply, debt consolidation is the process of refinancing your debts, done using a loan or line of credit, so they can be more easily managed.
By taking out an installment loan you can:
- Combine multiple debts together into one sum
- Simplify repayment by having your combined debt in a single place
- Pay a lower interest rate on that debt
Consolidating your debts can put you on the path to a healthy financial situation in a hurry. This approach is ideal for taking care of outstanding credit cards balances, since credit cards tend to have high monthly interest rates, and a debt consolidation plan is typically associated with much lower overall interest rates.
Advantages of Debt Consolidation
Debt consolidation can help anyone turn their financial situation around. But even before people are able to clear all of their debts, they report that consolidation helped them by:
- Creating a simplified repayment process
- Reducing monthly costs
- Defining the repayment timeline
- Providing a sense of control over a difficult situation
Best of all, this route helps people avoid some of the most unpleasant pitfalls that can result from the debt cycle, such as asking friends or family for money, selling off assets, downsizing their lifestyle or being forced into making a consumer proposal.
Consolidate Debt with an Installment Loan
While there are a number of options available to help consolidate debt, many require the type of collateral that may not be available to everyone. One avenue that is accessible to everyone, regardless of their credit report or living situation, is an installment loan.
Many people fall prey to short-term payday loans to make monthly credit card payments, which can often make their situation worse. But installment loans can help you avoid this dynamic because:
- You will only have one monthly payment to make
- You will get a lower interest rate than with a payday loan
- You will know exactly how long it will take to repay
Find your Consolidation Loan Today
A consolidation loan, in the form of an installment loan, could help set your finances straight in short order.
If you have issues with your financial institution or are juggling multiple outstanding credit card balances with high interest rates then you should look into consolidating your debt. Wiping out nagging debts with the funds provided by an instalment loan is only a few clicks away.
Don’t delay, get in touch with us to find out how we can help.