Using Debt Consolidation Loans in North York to Pay Credit Card Debts

Many people in North York Ontario use debt consolidation loans in North York to help them cope with enormous credit card debts. It’s one method for debt relief that allows a debtor to pay off his current debts with a new loan that has a lower interest rate and longer payment terms.

Taking out a consolidation loan can be most helpful to people who have multiple debts. It can simplify their finances as it can solve three of the worst problems many debtors face:

1) High interest rates

Credit card debts can carry extremely high interest rates, some as high as 25 percent or more. Even if you keep paying the minimum amount required, there’s a good chance you’ll see your debt growing faster than you can pay off. It can be really hard to keep up with payments and ultimately you’ll find yourself paying more on interest charges than the principal amount you owe.  A consolidation loan may allow you to get a lower interest rate and save you money over the long-run. Take for example you have three credit cards at 18% interest, if you have a good credit rating and the capacity to repay, then it’s possible for you to get a line of credit at 11% interest to consolidate these debts into one payment. The lower interest rate allows more of your monthly payment to go towards paying down the principal amount of the debt, instead of on interest charges, thus allowing you to pay off the debt faster. You can make this work if you have a steady source of income to enable you to repay the new loan.

2) High monthly payments

Another problem people with lots of debt frequently struggle with are the high minimum payments, which are in many cases more than what they can afford each month. When you miss payments, you get charge more interest, monthly payment increases, more interest charges are added to the debt amount, the higher monthly payments keep getting --- it all leads to a domino effect and before you know it you can’t stay above water. If your monthly payment is too high, a consolidation loan can sometimes be an option to lower your monthly payment, and that can give you enough breathing room to get back on track.

3) Financial mess because of too many bills

Too many bills to pay can get you off track your budget very quickly. One thing it can lead to is that it makes it hard to even keep track of which payment is due on which date. When finances are not properly planned and controlled, you’ll soon start overspending, missing payments until you are struggling with an unending debt cycle. Your financial mess will only go on being an obstacle for getting out of debt unless you focus and start a plan to pay out everything you owe. A consolidation loan can help you deal with this problem by allowing you to pay up all your other debts and reduce the number of bills you have to pay.  This will streamline your budget and get you to focus on only one loan to pay each month, making it easier to turn your finances around.

For a lot of North York Ontario residents who owe more than they earn every month, debt consolidation loans in North York may be one possible option to help them repay credit card debts. If you want to know if you qualify for a consolidation loan, it’s best to speak with a debt professional, like a licensed insolvency trustee or a credit counselor, who can provide you with all the information you need to make the best decision.