On the face of things, debt consolidation gets a bad press – and for some good reasons. But, it is possible to use debt consolidation wisely. With the right tactics – and for the right reasons – they can help you get back on track with your finances. There are some pitfalls, of course, but in today’s guide, we wanted to explore whether debt consolidation could ever work for you. Here are the major positives of consolidating your debts, and how to utilize them for your benefit.
Addresses Your Financial Problems
If you take out a debt consolidation loan for the right reasons, then you are already addressing your financial issues. It’s fair to say that you are also taking action to meet them head-on. As everyone knows, confronting your problems is the most important step on the road to becoming debt free. However, it is vital that you use it as a stepping stone to changing your behavior for good. Otherwise, the chances are that you will just fall back into debt again. This happens to around 70% of people that consolidate their debts. So, make sure you can count yourself amongst the remaining 30% that enjoy success.
Structures Your Repayments
One of the biggest benefits of debt consolidation is that it takes all your debts and gives you a single payment date each month. Managing several debts with different repayment dates dotted through the month can become overwhelming. And when you are facing a lot of the pressures that debts can bring, it’s easy to miss out on a payment,. But with that single payment to meet each month, it means you can focus on other, more important things in our life.
It Can Lower Interest
Many debt consolidation loans sound attractive because it appears that you will be paying less. For example, you might find that a Payday Loan Consolidation will be at a lower interest rate than the original loan. However, you need to be savvy enough to investigate all your options first to make sure it doesn’t end up costing you more than your original debt. Use an online interest calculator when researching potential loans. It is vital to ensure you are getting the best deal, or you could end up in more financial strife than you were before.
Stops Damage To Your Credit Rating
Whether you have a poor credit score or not, a debt consolidation plan can help you start to repair the damage. Because you are paying things back, you will be seen as a more responsible borrower. Of course, this is all assuming that you make your repayments in a timely fashion. It also avoids the severe damage that alternative measures – such as bankruptcy – can bring.
It brings peace of mind
As we mentioned above, confronting your debts head on can make a significant change in your life. No more hiding; no more worrying about debt collectors. There is a lot of value to the stress-free life you might experience.
As ever, make sure you understand the small print of any loan you take out. Many consolidation companies will charge you for managing your debt, although this is a price you might prefer to pay.