Have you been struggling with several loans and you are about to fall into bankruptcy? You need an urgent solution to clear these debts because they hurt your credit score and make life truly unbearable. Is there a solution for the problem? The best way to address the issue is debt consolidation. Debt consolidation is a method of refinancing that involves taking a loan to clear all other small credits.
Though debt consolidation has several disadvantages of being an additional loan, the benefits make it a worth undertaking. Here are four main advantages of debt consolidation.
If you have several credit accounts with balances, debt consolidation merges them into one single loan. Therefore, you will not need to worry about different payments, dealing with different parties, meeting diverse deadlines. This is important because you will have eliminated the worry about the loan to clear first and the ones to follow because everything will have been pooled into the consolidation account. After debt consolidation, the repayment period is extended so that you can pay less, maintain consistency, and raise your credit rating.
When you take a consolidated loan, the overall interest rate goes down. Many people with debt problems have credit card credits that charge high-interest rates compared to common financial institutions. By paying off the credit card loans and taking a consolidated loan with financial institutions, the rate of interest rate will come down by a great margin. The extra money can go into clearing the consolidated loan faster, savings, or buying personal items like an electric shaver 2017, home furniture, or clothing.
Higher credit score
When you have several loans to clear, your credit score goes down significantly. However, immediately you clear them using a consolidated loan, the credit score will go up. Besides, because you only have a single loan charging lower interest rates, maintaining repayment consistency will further push the credit score even higher.
Clearing personal stress
When you consolidate all your loans, you no longer have to deal with different parties. The worries of making mid-month payment, end month clearance, and dealing with different notifications from lenders will be eliminated. Note that when you are under stress because of different loans, productivity goes down and compromises your ability to earn more and clear them. However, after consolidating the debts, there will be no creditor calling you because you are dealing with a single lender. Therefore, you can concentrate at your workplace, open new revenue channels, and clear the loan faster.