Are you deeply in debt? Looking for a way to crawl out of debt? Debt consolidation could be the best option for you. It is a great direction to head in if you are unable to manage multiple debts and have to make several payments each month for different loans.
Debts consolidation is a program whereby you opt for a single new loan to replace all your existing loans and pay this off with affordable payments each month. It makes your repayment process easier by providing lower interest rates and helps you to save money on your repayments.
Consolidating your debts is the best option available to clear off your previous loans at a lower rate of interest and also plays a major role in saving your credit. Because if all your loans are cleared and you pay regular payments for the single loan that you possess your credit score should increase. The process may by time consuming but the results provided are worth it.
Benefits of consolidating your debts:
Lower interest rates:
By consolidating all your different debts into a single one you can achieve an overall lower interest rate on your loan when compared to the different interest rates of the multiple different loans you’re paying each month.
Flexible repayment plan:
When you opt for a debt consolidation program you will usually be provided with a repayment plan considering your financial position and your ability to repay the amount. You can further extend the repayment plan and reduce the amount of monthly payments.
Elimination of penalties:
When you opt for a debt consolidation program you can avoid paying late fees and penalties. This is possible as you are provided with a fixed repayment plan to follow and your debt consolidator will request for the creditors to eliminate the late fee charges for you.
Single monthly payments:
After consolidating your debts you need to make a single monthly payment to your consolidator who will in turn divide the amount and make payments to different creditors.
The penalisation of late payment fees creates a negative impact on your credit score. Once you get enrolled in a consolidation program all your debts should start to get cleared, so you should no longer be in the position where you are faced with late payments, so your credit score starts improving gradually. Once all your debts are cleared, your creditor will negotiate with your creditors and try to boost your credit score in your favour.
Once you start up with your debt consolidation program make sure you avoid making late payments. If at any point you feel that you are unable to make the payment for a particular month then you could go for payday loans to make the payment which you can repay with your next paycheck.
About the Author:
My name is Michelle. I am a tech writer from UK. I am into Finance :). Catch me @financeport