How to Use Debt Consolidation to Help You with Your Debt in Medicine Hat
Are you in need of some debt help? Do you have 2 or more high interest debts that you are having trouble keeping up with? If you are contemplating consolidating your debt to help you solve your debt problem, then read on as we discuss debt consolidation in today’s blog post.
What Is Debt Consolidation?
Debt consolidation is when you take 2 or more of your existing debts or loans and group them together into one larger debt. You can do this by taking out a consolidation loan from a bank that is large enough to pay off your existing smaller debts. A consolidation loan will often have a lower interest rate than credit cards or payday loans so you really are able to reduce your debt easily by changing your higher interest debts into the new consolidation loan. For example, if you have 2 credit cards that you are making minimum payments on and you are paying 19% interest on each of those cards you can save 14% interest by grouping the debts into one loan that charges 5% interest. With a lower interest rate, more of your money will go toward the principle balance and you will be able to pay less money to the creditor in the long run.
What is required of you to consolidate your debts?
To qualify for a consolidation loan you will need to have good credit as well as enough income to afford the monthly payments that you will need to make.
If you own your own home or have other large assets, you may be able to use that to secure a lower interest rate on your loan. When you have assets such as a home and also a good credit rating, the bank will see you as a lower risk investment and will often offer a lower interest rate. A lower interest rate than what you are paying now is the main goal, as this will help you to lower your payment each month and or decrease the amount of time you spend paying off your debt.
Is a consolidation loan right for you?
If your credit rating is low you may not be able to qualify for a consolidation loan. Also, if you believe the consolidation loan payment will be unaffordable, you should look into all of the options that are available to you so you can make an informed decision. In this case give us a call at 4 Pillars Medicine Hat and set up a free consultation with our Debt Relief Specialist, who will help you look into other options. Call us at 403-332-7361