For anyone who's eager to find a way to become debt-free the soonest possible time, debt consolidation is one solution to consider. But what exactly happens when you consolidate loans? Why are there so many people resorting to it? How effective is it in helping someone who's entire world is almost gone because of his never-ending monthly payments?
When a person has more than one loan account, he may opt to consolidate loans to one creditor alone - meaning all his loans from other sources shall be paid off by this creditor. From that alone, the problem of having to pay two or three creditors every month will become a part of the past. This creditor will help you find the most suitable debt consolidation plan that will allow you to reduce your monthly payment.
Unfortunately, not everyone finds it a good idea to consolidate loans, as true to a point, you'll end up with a longer payment term rather than when you choose to continue paying for your existing loans. Nonetheless, to consolidate loans will give you lesser monthly payments and interest rates, which is definitely more beneficial to those who have a limited source of income.
What Difference Does it Make When You Consolidate Loans?
1. Lower interest - if you're at the moment paying, for example, 6% interest rate for each of your 3 loans, that would translate to 18% interest rate every single month. However, when you consolidate loans, this 18% can possibly be reduced to only 15% per month.
2. On-time payment - the less debts you have to worry about, the more you can focus on your payments. If you have multiple loans to pay, chances are you won't be able to come up with enough money for all of them every month. You're also prone to making several excuses such as forgetting it or perhaps delaying the payment for some reason, which will only bring about penalty fees eventually. Unlike when you consolidate loans, you'll get more time and probably have enough resources to pay monthly for a single loan account.
3. Stop receiving those annoying collection calls - when you're not able to pay off your creditor, you can't expect them to just sit there and do nothing. They'll definitely call you from time to time to remind you of your payment, and more often than not, the calls are even more annoying than the loan itself.
When a person has more than one loan account, he may opt to consolidate loans to one creditor alone - meaning all his loans from other sources shall be paid off by this creditor. From that alone, the problem of having to pay two or three creditors every month will become a part of the past. This creditor will help you find the most suitable debt consolidation plan that will allow you to reduce your monthly payment.
Unfortunately, not everyone finds it a good idea to consolidate loans, as true to a point, you'll end up with a longer payment term rather than when you choose to continue paying for your existing loans. Nonetheless, to consolidate loans will give you lesser monthly payments and interest rates, which is definitely more beneficial to those who have a limited source of income.
What Difference Does it Make When You Consolidate Loans?
1. Lower interest - if you're at the moment paying, for example, 6% interest rate for each of your 3 loans, that would translate to 18% interest rate every single month. However, when you consolidate loans, this 18% can possibly be reduced to only 15% per month.
2. On-time payment - the less debts you have to worry about, the more you can focus on your payments. If you have multiple loans to pay, chances are you won't be able to come up with enough money for all of them every month. You're also prone to making several excuses such as forgetting it or perhaps delaying the payment for some reason, which will only bring about penalty fees eventually. Unlike when you consolidate loans, you'll get more time and probably have enough resources to pay monthly for a single loan account.
3. Stop receiving those annoying collection calls - when you're not able to pay off your creditor, you can't expect them to just sit there and do nothing. They'll definitely call you from time to time to remind you of your payment, and more often than not, the calls are even more annoying than the loan itself.
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Learn more about credit card debt consolidation. Stop by Elizabeth Natus's site where you can find out all about consoliate loans and what it can do for you.
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