If you’re overwhelmed, debt consolidation can help simplify paying off your debts. It is a process where multiple debts- credit cards, lines of credit, personal loans- are combined into a new loan that may have a lower interest rate. Instead of juggling multiple payments to different creditors, you make one monthly payment.
Benefits of Debt Consolidation
One monthly payment each month, helping you stay organized
Potentially lower interest rate (depends on your credit), meaning you’ll pay off your debt more quickly
Fixed repayment timeline so you’ll have a clearer idea of when you’ll be debt free
May protect your credit score if payments are made consistently
Who Qualifies for Debt Consolidation?
You are struggling to manage multiple high interest debt
You have a steady income and can make the monthly payments
Your total debt is manageable without needing more formal solutions like bankruptcy or a consumer proposal.
You have fair to good credit, which may help you qualify for a loan with a lower interest rate
Debt Consolidation Ontario
Frequently Asked Questions
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There may be a small initial dip in your credit score because when you apply for the loan, it will trigger a hard credit inquiry. However, making consistent monthly payments and reducing credit use will help improve your score in the long-term.
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Most unsecured debts can be consolidated, such as credit cards, personal loans, and lines of credit. Secured debts, such as mortgages or car loans are generally handled separately.
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No, debt consolidation does not reduce the amount of debt you owe. It combines your total debt into one loan so you only make one payment each month. In some cases, a lower interest rate may help reduce the total interest you pay over time.
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If your credit score or income makes it difficult to qualify for a debt consolidation loan, there are other debt relief options worth exploring, depending on your situation.
Not sure which debt solution is right for you? Book a free call and I’ll help you understand your options.