Deprecated: stristr(): Non-string needles will be interpreted as strings in the future. Use an explicit chr() call to preserve the current behavior in /home/quickydc/ on line 1054
Is a debt consolidation loan the best choice for you? -

Is a debt consolidation loan the best choice for you?

Weighing the pros and cons of a debt consolidation loan

Nobody likes being in debt or accumulating debt over a period. However, people often find themselves in a situation where their finances have gone out of control, and they have a mountain of debt that they must pay off. These situations are getting increasingly common, and it is always better to consider your options when you have a financial crisis. One of the best options available to people with debt is choosing debt consolidation to get out of debt.

It is essentially a personal loan that individuals can use for paying off high-interest debts, such as credit card debts. When you consolidate debt, you can pay off your credit card balances in full and have a simplified repayment plan. It could help you save you time and money, depending on the loan’s terms and how much debt you have. However, you must consider your financial goals and situation before deciding if a debt consolidation loan is the best choice for you. Here’s what you need to know about it.

When should you consider a debt consolidation loan?

Personal loans can be acquired for any reason and anything, but if you’re using them for debt consolidation, here are the instances where it may work for you:

·      You have an excellent credit score

People can acquire personal loans with any credit score, but if you want lower interest rates and favourable terms, Harris and Partners advise that you should have an excellent credit score, which should be above 670.

·      Your debt is high-interest

The average interest rate for personal loans is 9.41%, but the average interest rate for credit card debt is 16%. That is a significant difference, and people who can qualify for lower rates than what they’re paying already should consider debt consolidation loans to save money in the long run.

·      You have a plan for repayment

One of the worst things about credit card debt is that it is constantly revolving, which means you borrow and pay the funds on an ongoing basis, but there isn’t a repayment plan. If you’re using your credit card and only paying the minimum every month, you could find yourself paying off your debt forever. However, personal loans have a repayment plan, which makes them an excellent option if you can stick to it because it helps you get out of debt quickly.

When shouldn’t you consider a debt consolidation loan?

Even though you will benefit from clear benefits if you get a debt consolidation loan, there are instances where it may not be the best option for paying off your credit card debt. These include:

·      You haven’t changed your spending problems

A debt consolidation loan is beneficial because it means you can use the credit available on your credit card. However, once you have transferred the debt and then continue racking debt on the card you have paid off recently, your financial situation could worsen. Therefore, you must address your spending issues before you acquire a debt consolidation loan.

·      You have poor or fair credit

Even people with bad credit can get approved for personal loans, but they will pay higher interest rates. That will increase their costs and sometimes make the monthly payments hard to pay off, which would defeat the purpose of getting a loan in the first place.

·      You only have a small debt amount

If you think you can quickly pay off your existing credit card debt in the next six months to a year, then the savings you would gain from a debt consolidation loan won’t be beneficial for you. You don’t need to take out a personal loan when you can afford your monthly credit card payments easily.

Other articles from

wedding package

How Julie Scott redefined the wedding elopement – Helicopter wedding package

Is it possible to get an A for a 5-paragraph essay assignment in 1 hour? We can safely say yes, a student can get an A+ mark if he turns to EduJungles

real money casino games

What are the most popular real money casino games in Canada?

Canada’s online gambling industry is expected to generate more than $4 billion this year. Canada has long been one of the world’s top regulated markets for online gaming. While the country has a lower nationwide gaming revenue share than the U.S., Canada still offers a complex, competitive, and well-regulated market for casinos looking to expand

Kevin O'Leary

After Kevin O’Leary acquisition for $38.5M, Coinberry split into 2

WonderFi, a crypto ecosystem backed by Kevin O’Leary, plans to acquire Toronto-based crypto exchange Coinberry. The acquisition is valued to be around $38.5 million and it’s only for 30% of the company’s activity, meaning just the exchange. Legally, the company will be split into 2 – Coinberry Canada and Coinberry. The latter will be merged

Planning a new business

Planning a new business venture? Here’s how to research the idea further

Do you have an idea for a business? Are you wondering if it’s worth pursuing further? If so, you’re in the right place! In this blog post, we will discuss how to research your business idea further and determine whether or not it is worth moving forward with. We’ll cover everything from market research to

Montreal weather

Make use of the perfect Montreal weather with these fun outdoor activities

It’s finally the time of year when Montreal weather is perfect for going outside and enjoying all sorts of fun outdoor activities. Montreal offers the ideal mix of sun, rain, and cool temperatures so that there’s something to enjoy outdoors all year round. Here are some great ideas to start making the most of this

Poker options

Poker options at today’s casinos

Poker options – Imagine a poker game, and you probably picture a scene from the Cincinnati Kid or Casino Royale. Or perhaps you think of the likes of Phil Ivey and Daniel Negreanu playing for thousands in the World Series of Poker. Either way, it’s easy to see why people tend to see poker as

sports betting

10 common sports betting myths

Canada has one of the largest online sports betting markets in the world. The country of the maple leaf started its gambling journey much earlier than the majority of other countries. The majority of Canadians enjoy placing bets on sporting events. The Canadian sports betting market offers wagers on everything – from championships to the

Mtltimes Subscription

The latest on what’s moving Montreal and the world – delivered straight to your inbox