Home / Debt Consolidation Loans: Facts, Considerations, Other Options
One option to gain back control of your finances is to seek out a debt consolidation loan. This can combine all of your debts into one payment. The question then becomes, is a debt consolidation loan the right move for me?
Despite making regular payments the statement balances are either staying the same or maybe even going up a little bit. No matter the type of debt, whether it be credit card debt, income tax debt or other types of debt, it’s always better to get ahead of this problem than wait until the collection agencies start calling.
Applying for a debt consolidation loan is a good option to explore when you realize that you have too much high-interest debt. Trying to pay off the individual debts that have high-interest rates can become impossible. The high-interest rates mean that any payments you make are only paying interest with little reduction to the actual loan balance. This makes you a good customer for the lender because they are making money off of you. Debts that fall into this category include:
We provide a complimentary financial assessment where we can review your financial situation and assess whether a debt consolidation loan is a viable option for you. We can advise you of the documentation you will need to organize and which lenders to approach and who to avoid.
The typical place to apply for a debt consolidation loan is your bank or credit union. You may have been banking with them for a long time and they are familiar with your finances. If approved, you can use the funds to pay off all of the individual debts and be left with only one new loan to pay. The best things about qualifying for a consolidation loan is you will have:
Pro tip: be especially careful about what amount of interest and fees that you are being charged on the debt consolidation loan. A debt consolidation loan may not be the right move for you if the monthly payments or the interest rate is too high. Generally, you want the interest rate to be much, much lower than what you are currently paying on your other debt.
Applying for a debt consolidation loan is one thing. Getting approved for one is another. There are many possible reasons why you may not be approved for a new loan:
Even if you have been approved for a debt consolidation loan, there are some other things to consider before you sign on the dotted line. For instance,
Maybe you have applied for a debt consolidation loan and been rejected. Or maybe you have applied, been accepted, but are still uncomfortable with the terms of the loan. The interest rate could still be too high or maybe the payment will not provide enough breathing space in the monthly budget. You might be thinking to yourself, is a debt consolidation loan the right move for me? Well, you should be aware that there are other debt-relief options available that may fit your situation better.
Before any big decision is made, we feel that it is important to get all the important information. As an independent office, we have the freedom to take as much time with you as you need in order to make an informed decision. In regards to dealing with debt, we offer a complimentary, confidential, no hassle appointment where we will take a look at your situation and offer you this information. Our experienced staff can help find you a debt relief option that fits your budget and will cost you less per month than the debt consolidation loan.
The Government of Canada recognizes that Canadians from coast to coast can need to reset their finances rather than be stuck in a cycle of never-ending interest payments. To that end, the government has approved two options which they regulate.
The most popular government-approved option is a Consumer Proposal. This is a method of debt consolidation which is filed via a Licensed Insolvency Trustee (LIT). A Consumer Proposal will allow you to consolidate your unsecured debt into one monthly payment that actually fits your monthly budget. Lastly, during the Consumer Proposal process, your unsecured creditors are not supposed to contact you so there is peace and quiet.
If the monthly payments required to do a Consumer Proposal are still too much, the Government of Canada has also allowed for a person to gain debt relief via the bankruptcy process. Again, this must be filed by a LIT. While some may find that the word bankruptcy is scary, it can be the most practical, fastest, least expensive way to obtain debt relief so that you can get on with your life.
Please feel free to contact us to set up a meeting in person, by phone, or online in order to discuss your debt relief options.