If you live in Canada, you have various options available to you when you consider debt consolidation. Each option has its own pros and cons, and it’s always a good idea to work with an experienced team of advisors to help you choose the right solution for you.
If you have a lot of debt, there are many benefits to consolidating your debt. Not only will you save on your monthly repayments, but you can also lighten your financial load while keeping your credit score intact. Whether you are a first-time home owner, or simply someone who has a lot of debts to pay, considering consolidation can be a great way to pay off all your loans, and only have one repayment to do every month.
Debt Consolidation Options
Here are 5 of the most popular options to consider when you are looking to consolidate your debt.
- Using a debt consolidation loan. This refers to a loan given by a bank or a finance company, providing you with the money you need to pay off your existing outstanding debts, consolidating them as one. You will be able to pay them off at once, leaving you with a single repayment to do towards the bank or finance company who provided you with a consolidation loan.
- Consolidating your debt with an overdraft. It may often be hard to get a line of credit at the bank, but if you do qualify, this can be a great way to consolidate your debt. You can take out an overdraft that will be enough to cover your existing debts so that you can repay them and simply pay back your overdraft every month. It is essentially the same as a line of credit, and you only have to make a minimum payment every month.
- Using your credit card to consolidate debt. Although this should not be your first option, you can use your credit card to consolidate your existing debts. Since you only need to make a minimum payment on your credit card every month, you can choose to make slightly higher payments, thereby paying off credit card debt faster, and saving on interest rates.
- Making use of a debt management program. A debt management program will take over all your credit card payments and consolidate them into one monthly payment. You make one payment to your lender, and they will disperse the funds to your various creditors.
- Choosing to do a debt settlement. If you have a lot of outstanding debt, you can phone up all the various creditors and ask them about a settlement amount. This will usually be given at a discount since you will be paying your entire outstanding amount at once. Once you have all the totals, you can use a consolidation loan to settle your debt at these rates immediately. You will then only have your consolidation loan to pay every month. This option is often more affordable if you work with an experienced team of advisors such as the Mortgage Guys.
When it comes to debt consolidation, you have a lot of options available. You can benefit from these options and improve your financial situation, making it essential to consider consolidating your debt, especially if you want to maintain a good credit score.