Debt problems are very real for many residents of Mississauga, but consumers are fortunate to have many options that can help make it possible for them to get out of debt. Debt consolidation Mississauga is one of the simplest ways that is why more people are turning to it to help them manage their existing debt.
Debt consolidation is a debt relief solution that helps you pay off multiple unsecured debts such as credit card debt, payday loans, utility bills, unsecured lines of credit using one new loan. When you consolidate your debt, you only have one payment to make instead of several payments with different creditors. In addition, it reduces the monthly amount and interest charges that you would have to pay to settle the debt. .
It’s a simple, straightforward solution with some benefits:
- You have only one payment to make instead of multiple payments.
- You pay at a lower interest rate.
- You pay one creditor with a single due date instead of multiple creditors with multiple payment deadlines.
- You get to repay many of your debts.
But, can it really be this simple and easy?
Remember that when you are consolidating debt, you are simply getting a new loan to pay off your old debts. You are not reducing the amount of your debt, your debt level remains the same. Nothing has changed essentially. You are only restructuring your debt and refinancing with a new loan to pay off some of your debts.
If you can combine all of your credit cards, line of credit and other loans into a lump sum and you can pay this off with at a lower interest rate and with a monthly payment that’s manageable, then debt consolidation can be a godsend. But if you don’t know how to consolidate your debts the right way, you could be worse off.
Getting out of debt through debt consolidation can be a real possibility if you keep in mind some of these tips.
Get a new loan with a low-interest rate
Interest rates are the real culprit here. They can really let your debt balloon, so reducing the amount of interest you pay should be one of the first things you need to work on. Try to negotiate with your existing credit card providers and ask them to lower your interest rate. If your credit rating is reasonable, they may help you to avail of one of their low-rate cards. You can also ask your bank or credit union for a term loan which usually come with lower interest rates than most credit cards.
Research your options before consolidating
There are many ways to consolidate debt. In Canada, your options include:
Unsecured loan - A loan that is not tied to any asset.
Secured loan - A loan that requires collateral as security for repayment.
Balance transfer - Where you transfer your outstanding debt to a low interest or zero interest credit card for a certain promotional period or a new or existing line of credit.
Debt settlement - Where you stop making payments and then negotiate with creditors to accept a smaller amount as full payment.
Debt management plans or DMP - A payment plan where you pay a specified monthly payment to a credit counseling agency who disburses this to your creditors.
Using a home equity loan / refinance mortgage / second mortgage - A loan that you take out against the portion of your home that you own.
The right type of consolidation loan will allow you to pay off your debts at a lower interest rate and a payment plan that is manageable.
Be mindful of taking a debt consolidation in Mississauga only if it is the best option for you and your family. Talk to a Licensed insolvency Trustee before making any final decision so you can weigh in all the options you have to help you find the right solution.
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