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One big unforeseen circumstance that is faced by people all over the world and of all walks of life right now is the COVID-19 pandemic.
As the world tries to cope with the changes in lifestyle, and with businesses coming up with ways in an effort to control the pandemic, there will continue to be an increase in people needing better medical coverage and facing unemployment or a decline in their income.
As we weather the COVID-19 pandemic, many of us might need to take out a loan to help get us through these tough times.
And most probably, post COVID-19, people might find themselves struggling to pay back the debts that incurred during this trying period.
Weathering the COVID-19 pandemic is enough to stress us out already without having to fret about how we are going to get out of debt.
One debt relief strategy you should consider is debt consolidation. This is an especially good strategy if you have multiple loans and are struggling to make the monthly payment for each.
Wondering what debt consolidation is? Well in the simplest of terms, debt consolidation means that you take out a loan and use that one loan to pay off your other loans.
You might ask yourself, “Why would I do that when? I’m trying to pay off my debt, not get more. How does taking out a new loan solve my problems? Keep reading and we will tell you why.
1. You will save money on interest
One reason that people find it hard to pay off debts is, the longer you take to pay, the higher the debt payments grow.
When you take out a loan, you agree to pay off the entire amount in monthly installments. However, loan payments also include interest rates. Because of the interest rate, your monthly payment increases especially if you do not pay on time, much worse if you do not make a payment at all.
So that means, as the months go by you will not be paying the same amount every month but a little more every month.
If you have a lot of debt, these small increases in your debt payment can make it hard to stick to your repayment plan. However, when you agree to a debt consolidation program you also agree to lower interest rates.
The new loan that you take out to pay your debt through debt consolidation will have a lower interest rate than the original loans. This will allow you to budget better and pay off your loan faster.
Typically, financial institutions in Canada have an interest rate of around 14% for a secured loan, but can get as high as 30% for an unsecured loan. In contrast, debt consolidation loans usually have an interest rate of 7-12% only.
2. You will only have to worry about one monthly payment
If you have multiple loans, it can be confusing and stressful to budget for each of the payments. Oftentimes these loans come with different interest rates and due dates so it can be confusing to budget and schedule.
Forgetting when your loan payment is due will make it even more difficult to pay off your debts as there are often late penalties and fees. Not only that, but it will affect your credit score as well.
With debt consolidation, you just need to remember to pay one loan – the low interest debt consolidation loan.
1. It won’t work if you have bad credit
The key to debt consolidation is to be able to get a low-interest loan that will allow you to pay off your other loans. However, if your credit is bad, you might not qualify for a low-interest loan.
2. You will need to provide collateral
A car or property like a home are common forms of collateral.
Most banks require you to provide collateral if you want to take out a debt consolidation loan. There are very few banks that will approve an unsecured debt consolidation loan. In the rare instances when a bank approves an unsecured debt consolidation loan, the loaner needs to prove that they have a high net worth or they need to get a co-signer with a high net worth and a good credit score.
To know more what you can benefit from our Ontario Debt Relief Program, simply try our Debt Consolidation Calculator below and one of our debt specialists will get in touch with you and provide you the best debt relief option that fits your situation.
No contact details required to find out if you qualify
We will help you reduce as much as 75% of your debts and consolidate it into a single affordable monthly payment. Your creditors will stop harassing you and all interest will freeze if you get into our Ontario Government Debt Relief Program.
Many Ontarians are already benefiting from our Debt Relief Program, YOU should too!
Find out how much you can write off portion of your debts by getting your Free Savings Estimate below. A debt specialist from National Debt Relief Services in Ontario will discuss all options and provide you tailor-fitted Debt Relief Program.
SEE IF YOU QUALIFY TO:
No contact details required to find out if you qualify
A Debt Consolidation is a negotiated debt settlement offer made between you and your creditors with the help of a Debt Relief Agency in Ontario. Some key benefits of Debt Consolidation are interest-free program, no upfront fee required, combined monthly payment into one affordable amount, no lawsuits, and many more.
Yes, your assets are safe from creditors. A licensed debt relief agency in Ontario will help you come up with an offer to your creditors that will make sure your assets will be out of the paper.
No, in fact, this is one of the great advantages of a Debt Consolidation Program. All wage garnishment will stop from the day you filed the proposal.
The effect on your credit score is not going to be severe. Your credit score will most probably go to R7 Rating and will remain in your credit report for another 3 years after you completed the program. This means that it will not be permanent and you will still be able to rebuild your credit score.
This varies depending on the proposal you will be discussing with the help of a certified debt relief agency. It is also worth noting that debt consolidation cannot exceed more than 5 years.
If a debt is shared, you need to file a joint debt consolidation offer to your creditors. However, in most cases, in which the debts are individually incurred will have no impact on your spouse.
After three missed payments, your debt arrangement with creditors will be broken and you will end up getting chased again for the original debt amount plus interest.
A debt consolidation offer can be paid off earlier if you can. In this way, you receive your “Certificate of Completion” sooner and you can immediately start rebuilding your credit score.
National Debt Relief Services Ontariois a certified Canadian Debt Relief Agency that offers FREE CONSULTATION to your debt consolidation needs. We value the trust given to us by our clients by making sure your personal information is confidential and private. Our personalized plans are designed to tailor fit your financial capacity. Our specialists will get in touch with you by simply answering a few questions thru the link provided below.
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