3 Reasons for a Debt Consolidation Loan
Debt consolidation has been around for as long as there has been debt, although the modern industry really grew from the start of the 2008 financial crisis, as more and more people were unable to deal with their debts. During this time, some lenders also increased their conditions and interest rates, making it more difficult for people to get the loans they needed to manage their finances.
If you have a number of loans and you are finding that they are becoming unmanageable, then maybe a debt consolidation loan is right for you. Here are 3 reasons to take out a debt consolidation loan from our experts.
1. You may pay less interest on your debt
Many people who apply for debt consolidation owe a number of short term loan companies which charge incredibly high rates of interest, payday loans being the worst. However, if you take out a debt consolidation loan with the right company, you can pay off these smaller debts with high interest rates, paying a low interest on your consolidation loan and saving money in the long term.
2. You avoid multiple fees
Many debt companies will charge you late fees, admin fees, communication fees and so on, all of which will add up quickly, especially if you have a lot of outstanding loans with lots of different companies. A debt consolidation loan will help to remove this. By dealing with only one company you will no longer have multiple companies charging you, and you will be able to organise your cash flow more easily too.
3. You don’t need to increase your debt
Credit card debts can be open-ended. They allow you to keep spending and adding to your debt even if you can’t afford it. With a debt consolidation loan, you only need to borrow enough to pay off your debts. You will be told the final amount you need to pay and be given a predetermined settlement date, meaning that your debt through this loan won’t increase if you make the repayments on time.