Is Debt Consolidation The Right Option

Is Debt Consolidation The Right Option

The economic recession we have all been suffering through over the last few years has created many problems for those of us with debt. The combination of a mortgage, car payment, and several credit cards in addition to your normal utilities can create a lot of stress. If you are feeling overwhelmed with all of your debt and need some room to get back on track, then debt consolidation could be the right choice.

What are the benefits of debt consolidation?

  • These loans typically have a low interest rate but sometimes can be high depending on your lender. This normally results in you paying less interest than you would by paying your payments normally. It’s always great when you can save a little bit of money and make your life easier in the process.
  • You would have only one monthly payment instead of however many you currently pay. Lot’s of times you have payments spread throughout the month and when you are struggling to pay your bills on time it can be difficult to pay them all on time. With one payment you have a lot less to worry about and can send it out on time every month.
  • It will stop all of the annoying phone calls reducing the amount of stress.

Am I eligible for debt consolidation?

  • One of the most important things lenders look at when considering this type of loan is a steady and consistent income. The lending institution will likely ask for proof of income so be prepared.
  • You would want your credit score to be in fair condition when applying for the loan. Most lenders won’t feel comfortable lending to someone who has shown they are unable to pay their bills on time.While some late payments may not be a deal breaker you should try your best to keep your credit clean.

This type of loan works best for those who are nearly unable to satisfy all of their debts on a timely basis. Waiting until you have already defaulted on your obligations may be too late. If you do qualify for a debt consolidation loan you may want to consider entering credit counselling to help you manage your finances better in the future. Remember, old habits die hard.