If you’re having trouble managing multiple bills with high interest rates and monthly repayments then a consolidation loan could help you. A consolidation loan is where you take out a single loan to cover a number of existing debts. They are available as either unsecured or secured loans or mortgages. There are a number of benefits to taking out a consolidation loan.
A debt consolidation loan can enable you to lump all you existing bills into one, manageable monthly payment with a lower interest rate and monthly outlay than you would be paying if you were to continue to struggle with multiple bills each month. This will mean that your monthly disposable income will go up. Calculate the monthly payments, interest and any other charges on your existing bills. Then compare the figure with what you need to pay for the low debt consolidation loan. Make sure your monthly payment on the consolidation loan is less than your current bill payments otherwise you are getting no benefit at all. You can usually pay off your consolidation loan over a longer period of time than your existing debts also.
Consolidating your debts into one manageable payment each month will greatly ease stress. Financial worries can weigh heavily on a person and the relief of not getting calls from creditors and debt collection agencies can make a huge difference to your frame of mind and your quality of life!
Opting for a consolidation loan before your debts become overwhelming will mean that your credit score won’t be affected. Defaulting on loan or credit card payments will stay on your credit score for up to six years and will affect any future applications you make for credit facilities. You may be refused outright or you will be offered credit at very high interest rates.
Once you’ve decided that you want to go down the route of a debt consolidation loan then make sure you shop around to get the best deal available to you. Interest loans will vary depending on the lender and you need to ensure that you pay the lowest interest rate available and as little as possible on your monthly repayments. Before you sign any paperwork check the small print in the loan agreement documents and ask the company to break down in detail the costs of the loan to make sure there are no nasty hidden extras that don’t become apparent until after you’re tied in.