Canadian consumer debt is nearing $768 billion, according to second-quarter reports of 2019. With so many areas of debt (mortgage, car, student, etc.), it can be challenging for ordinary Canadians to keep up.
The average Canadian household carries about $4,240 in credit card debt. Aside from that, Canadian families are also paying off student loans, mortgages, and car loans, among other liabilities. As a result, a lot of Canadians are often finding themselves with a substantial debt that they can barely afford to pay, and the country’s national debt isn’t looking like it will decrease anytime soon.
Fortunately, there are a lot of ways you can get out of debt easier, and one of the most popular ways to do it is to get a debt consolidation loan.
What is debt consolidation?
If you find yourself in a financially tight spot due to multiple debts, you can get consolidated debt counseling in Sudbury to discuss your options about debt consolidation. Debt consolidation is a type of loan that you can use to pay off all of your other debts, thereby consolidating all debts into a single loan.
What are the benefits of debt consolidation?
Choosing to consolidate your debts into one loan is a popular option for debt relief due to the following advantages:
1. Lower interest rate
A lot of Canadians who are overwhelmed with debt are usually in that situation because of the high-interest rates that some loans have. In most cases, a lot of households can only afford to pay the minimum amount, thus leaving the interest to gain late fee payments.
Not being able to pay high-interest rates is the reason why a lot of Canadians choose to consolidate their debt. With debt consolidation, there is an excellent chance of lowering your interest rate with the current loan, which will help you save a substantial amount of money and pay your consolidation loan faster.
2. Ease of payment
It is much more convenient to make a single payment than to pay multiple credit cards, car loans, mortgage accounts, and other debts. A consolidated loan allows for more manageable payments by requiring only a single payment each month. Moreover, there is less chance that you miss a payment or pay late, especially if you have a busy schedule.
3. Better credit score
Making late or incomplete payments to your creditors can wreck your credit score. Luckily, you can boost your credit score by paying off your debts with a consolidated loan. However, maintaining a good credit score will still depend on your ability to pay the new loan entirely and on time.
4. Peace of mind
Knowing that you have paid off all your existing debts can be a huge relief for you and your family. Furthermore, you have a dramatically decreased risk of losing your assets to debt collectors, especially your home and your car.
If you’re struggling to pay off your debts, a debt consolidation loan can give you a more manageable way to pay them off while letting you enjoy the benefits that we talked about above.
Do you want to learn more about debt consolidation and debt risk management? Talk to a trusted consultant by visiting 4 Pillars today.