For those struggling with multiple debts owed to multiple lenders, it can sometimes feel like you are only working to pay back what you owe. Even if you already have two jobs and are taking as many overtime shifts as you can, it can seem like all of your money is being siphoned off to pay back debts. While this can be dispiriting, there is hope.
A debt consolidation loan can be a big help for those with multiple debts of all sizes. Commonly recommended by many financial planners, debt consolidation is a straightforward process that will gradually allow you to pay back your debts in a much simpler and easier way. Taking the stress out of the debt equation will also allow you to get your life back and spend more time focusing on what matters to you.
Let’s look at some specific ways in which a debt consolidation loan can help you deal with your debt.
If your multiple debts are spread out across several different lenders, then it can be confusing to keep things organised. Some months, you may easily forget what bills have already been paid and what bills remain outstanding. This makes it easier to miss payments which will then damage your credit score and maybe even force you to pay additional penalties on your debts.
However, debt consolidation allows you to pay back all of your debts at once. Afterwards, you will only have a single, albeit larger, debt to worry about. Making payments on this single amount each month makes the process of remembering to pay much easier. If you have problems with organisation, then debt consolidation is worth it for this reason alone.
Many consumer debts, such as credit card debt, have high-interest rates that will quickly compound the amount of money that you owe. For those in an already precarious position, this can make the situation much worse.
However, with debt consolidation, you can negotiate to have the interest rate of your debt set to a more reasonable level. In the long run, you will have to pay less for the debts that you currently owe. As an alternative, you may even be able to negotiate a longer repayment period to make your monthly payments much lower.
This is perfect for those who are struggling to make ends meet while simultaneously paying back a heavy load of debt. Consult with a professional financial advisor to see what kind of rates you can expect through the process of debt consolidation.
Being stuck in debt and missing payments is harmful to your credit score. If and when you need to borrow money again in the future, you might have to accept terrible rates and terms if your credit score is too low. You may even be denied access to funds if you have not been diligent in paying back your debts in the past.
However, debt consolidation is a good way of preventing your credit score from being harmed. As long as you make sure to repay your debt consolidation loan, you can rest assured that your other outstanding debts will be taken care of, and will no longer pose a looming threat to your credit rating.
For those mired in debt, debt consolidation is one of the best options for gradually pulling yourself out of it. While you will still need to repay this kind of debt over time, it makes the process of doing so much easier and gentler.