Pros and cons to consolidating loans

I’ve helped thousands of Canadian families understand how to deal with large amounts of unsecured debt.In this article, I’m going to explain in very simple terms the basics of debt consolidation.So when you get a debt consolidation loan, you can look forward to a certain amount of personal attention.Pro #2 — Interest rates are usually pre-set by creditors, so the debt consolidation firm handling your loan can definitely get lower interest rates and reduce (or even eliminate) late fees better than you can.You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved. You may be considering tapping your home equity to consolidate your credit card debt, a move that can lower your interest costs but has risks.Because of these risks, Nerd Wallet recommends that you reserve home equity for emergencies.Debt consolidation is a popular (and legal) way to significantly lower your debt in Canada.In this guide, 20-year financial expert Paul Murphy takes you through the basics of why Canadians use debt consolidation.

A “no” answer to either question indicates too much debt.

Consider these pros and cons: Pros A homeowner with good credit is likely to have better options that don’t risk the house.

A homeowner with shaky finances shouldn’t move unsecured debt that can be erased in bankruptcy to secured debt that can’t.

Such loans also tend to offer a longer repayment period.

So if you want to look at the pluses and minuses of debt consolidation for your personal situation, you might want to start by considering your monthly cash flow — and ask yourself the following questions: Pro #1 — When you opt for debt consolidation, you have only one creditor to pay, and that company will call your creditors and negotiate on your behalf.

27

Leave a Reply