Most people tend to have a number of debts that they continue to pay off on a monthly basis. Depending on where you are at with your life will determine just how many individual debts you incur. Obviously someone in their early 20’s will have fewer overheads than someone in their 40’s that is married and has children. This will apply more to people that have several loan accounts with lending institutions, banks and stores, as they currently manage numerous accounts. If this applies to you and are unsure whether or not to have your debts consolidated, here are 5 reasons why you should consider it.
One Overall Debt
To begin with, receiving a debt consolidation loan integrates all your exiting debts into one. This is a much more convenient and manageable method to paying off your debts as you only handle the one account, opposed to chipping back and forth trying to manoeuvre suitable payments between separate accounts. If you struggle to make necessary payments to numerous accounts, a consolidated loan will remove this stress.
Smaller Monthly Repayment
Yet another benefit of a consolidated loan, in most cases, the overall monthly repayment will be somewhat smaller opposed to the total repayments made over several different debts. This will obviously make paying your monthly repayment much easier and you shouldn’t have to stress about coming up with the amount owed each month. The pitfall to this scenario is that long-term, your payment scheme will be longer than original.
Smaller Interest Rate
Once your loans are consolidated, you have the option to negotiate (depending on the amount and flexibility of your loan) the interest payable each month. This will depend on a number of factors in the economy at the time also, however in many instances, the interest rate may alter and play in your favour.
Save on Total Interest Repayable
You’ll be able to save excess amounts of money that would have been paid on all your individual debt accounts. Opposed to paying several interest amounts of different loans, a consolidated loan will only inherit one final interest rate. This has the potential to save you an immense amount over the duration of your loan, as the one interest rate and amount payable long term will be considerably less than several interest payments.
Come Out Ahead
Now that your loans are consolidated and you are potentially saving money on interest and excess repayments, you will be saving extra money that would have originally been paid to these loans. Here, any amounts that you have managed to save, can be allocated to your consolidated loan. This will eventually allow you to pay off your debt much faster than the anticipated time frame.
Consolidated loans are an effective way for many people to help manage their debts. However it is not suitable for many others. If you are struggling with your debt and are considering debt consolidation, contact Fox Symes for a fast, obligation free consultation.