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DEBT CONSOLIDATION CANADA
Debt consolidation in Canada is a way to get all of a borrowers debt put together under one umbrella for easy management and payment. The term debt consolidation Canada which a lot of people search for on the internet is the situation where credit unions, financial institutions or banks give money to a consumer to pay off all debts owed.
This brings the debts together and allows Canadian borrowers to pay off debts. These debts may be overwhelming and with just that one loan taken from the banks or other financial institutions you can pay off your debts. Getting the loans merged, makes payment much easier and convenient.
When your debts are scattered it is very easy to be overcome by it and makes payments difficult to keep up with. The thought of owing so much can cause depression, fear, frustrations or even get angry at the wrong things or persons.
Sometimes the relationship between family and friends gets destroyed because of debts all around them. These problems might seem far-fetched but are as real as day and night so must not be treated lightly.
One way to get out of this situation is to consolidate all debts or loans and get one loan with a low interest rate that will service the loans with one repayment monthly.
This reduces the stress with having several loans or debt because payments are made easier, affordable and more convenient. A lot of people are looking for debt consolidation loans in Canada because repayment on such loans monthly is manageable due to the consolidation.
Taking a debt consolidation loan in Canada will simplify your life. If for example, you have several credit cards debt, taking a debt consolidation loan can pay off the credit card loans. This will leave you with just one loan repayment at the end of the month.
Debt consolidation Canada advantages
There are advantages of debt consolidation in Canada, we will discuss just a few below.
Pressure from creditors will be reduced
If you owe creditors, they will not let you rest until they are able to get back their money. What lenders do is to disturb you with phone calls as well as emails as they need their monies to be paid. The calls will end as soon as a borrowers debt with lenders is cleared (with debt consolidation loans).
A borrower’s monthly repayments are lower
In place of a larger repayment, most lenders offer borrowers the option of having a longer repayment plan. Instead of using almost all of one’s income to repay all the various loans. Taking debt consolidation loans Canada with its lower interest rates allows a borrower to pay the loan and still have some extra cash to spend on other necessities.
Creditors are paid swiftly
Creditors are immediately paid when a borrowers debt is consolidated. When this is done damage on the borrowers’ credit rating is significantly reduced. In most cases, the credit rating is even improved with the on-time repayment.
With debt consolidation Canada, the loans got help a borrower start a clean sheet with repayments because the repayments are not as high as with the previous debt of the borrower.
Household budgets are simplified
The Stress of paying various debts or loans at the end of the month is totally gone. This gives Canadian borrowers of debt consolidation loans some relief to attend to other bills at home.
With one repayment at the end of the month, a borrower will not have to be thinking of several amounts being taken out of his or her account.
Repayment is one time
You don’t have to pay for all the different creditors at their different banks at the end of every month anymore. That tiring activity at every end of month ends when a borrower gets a debt consolidation loan as an option for the payments they have to make.
Due to the number of creditors, it is very likely a borrower might miss one or two payments and this will go against him or her. In this regard, having one payment makes life a whole lot easier since it is unlikely that a borrower will forget to pay that one debt.
Interest rates are lower
Debt consolidation Canada loans have interest rates that are lower than the usual loans charged from banks or non-bank financial institutions. It’s a conscious effort by these debt consolidation institutions to make it very possible and easier for borrowers of loans in Canada to pay back their loans.
The loan taken helps to pay off the debts due to the low-interest rates and most of the times some extra cash is left to sort out other financial problems. This depends on how much you owe and the repayment amount as well as the duration of the debt consolidation loan.
Debt consolidation Canada disadvantages
Some of the disadvantages of debt consolidation Canada loans are that :
- Collateral is usually involved when it comes to consolidation of loans.
- You need to have a good credit report to qualify for a debt consolidation Canada loan
- Debt consolidation Canada loans are higher in rates than that of refinancing home loans.
Which types of debt are eligible for consolidation
Debt consolidation Canada loans are not always the best for all kinds of loans because they might not work as intended. Consolidating a mortgage loan with others is not advisable. What a borrower should do is to write a list of all the debts owed down.
Then talk to a debt consolidating expert to know if paying the loan individually is a better option or consolidating them.
In some instances, paying off the debt individually might rather be a more responsible thing to do than putting all the debts together.
The only issue here is remembering to pay each of the debt at the end of the month. This is definitely a test of a borrowers responsibility. Some of the debts that are best consolidated are credit card debts, utility debts as well as consumer loan debts.
Shopping for too many credits can affect a borrowers credit scores
As a lender, one of the core responsibility is to make sure the borrower is not too risky or can be trusted when it comes to repayment. With this at the back of a lenders mind, checking a borrowers credit report and finding out the borrower has been ‘shopping’ around for loans immediately raises a red flag on that borrower.
This could be an innocent move by the borrower to find the best loans available. However, for a lender, this does not speak well of the borrower. To a lender, this means you are looking for loans which can easily overwhelm you and cause you to default on loans taken.
Building a credit history makes it easier for you to get debt consolidation loans
After paying off your credit on your credit cards, it is never advisable to cancel the credit cards which have been fully paid for. This is because the information and the history of your payments on the credit cards is a good credit history which must be kept.
Building your credit can be a very difficult task so throwing away all that information can be to the detriment of the borrower in the future. One trick to building a good credit history is to pay all the house bills using your credit card.
After doing this, pay off other loans immediately or at the end of the month. This pattern of borrowing and payment will be useful in the future. With this pattern, you are building a very good credit history which will be very valuable information when you need a ‘bigger’ loan in the future to consolidate your debts.
To be sure of how well your credit score is doing, you can apply for your credit report so you can see the trend. If your score is lower than what you actually expected, it could simply mean that you have too many loans all over the place. This is exactly where debt consolidation Canada comes into play.
Building a credit history continued
A debt consolidation loan will be very handy because it will pay off all the loans scattered around and leave you with one bulk loan to service. When the loan is in one place and with one lender, repayment is much easier and convenient.
You will not have so many lenders pulling you in all directions to get their money at the end of the month. Debt consolidation Canada loans can easily be used in building ones credit history.
The loan in effect works two ways which are paying of your debts as well as building your credit history. Good stuff isn’t it? Fortunately, there are so many banks and credit unions around who have people whose work is to help clients out with debt consolidation.
Debt consolidation experts or credit counselors are also available with their world of knowledge about credit and all the other factors involved with it. Take advantage of these services because they are free and will open your mind a whole lot about credit and how well to service credits taken and how to avoid all the mistakes.
How do I qualify for debt consolidation in Canada loan
Most borrowers don’t know if they qualify for a consolidated loan and so get saddled with so many debts. First of all, a borrower having a good credit score is one basic requirement the banks will look out for. Your income must be good enough so that paying off some loans will not affect other financial obligations.
Another thing is a borrower being able to give or present collateral that is considered worth the amount to be given or even more than the amount to be loaned. When a borrower is not able to produce the above requirements the possibility of getting a consolidated loan can be a bit reduced.
However, if the borrower is able to bring a co-signer who has good credit, that can help the borrower in acquiring the loan. For many Canadians, taking a debt consolidation loan will not be the best option if after consolidation the repayments amount is very high.
In some cases, servicing the debts individually will rather be more convenient. Borrowers who have issues with debt and need help with debt consolidation might have to speak to a debt consolidation expert or a credit counselor. This helps you to understand the situation much better and then a better option can be decided on.
If you need help with debt consolidation it is better to get help earlier to avoid messing up your credit ratings. These debt consolidation experts are very well versed in the area of debt consolidation and will be able to help you out of the situation you are in with an appropriate solution.
Family and friends can be of help
Some family and friends are very willing and capable of helping. Some have the means to help but will not whilst others can and will help. If they are not able to help or are not willing to help, don’t be offended since it could mean they are avoiding future misunderstandings.
Whiles some family and friends will not mind you not paying back the money loaned from them, others will not take it lightly and this can cause a family feud.
Borrowing from friends can develop into two major things. These are :
• The ‘lender’ being a friend or family can decide to excuse the debt so as to maintain the relationship with you if you refuse to pay them back. On the other hand,
• The ‘lender’ being the friend or family will make sure to get back the money loaned and this has the possibility of marring the relationship.
Family and friends continued
Sometimes the reason a family member or a friend will refuse to give you the loan is that the value placed on the relationship is much more important than the little ‘anger’ that will be displayed immediately.
Like the saying goes ‘a stitch in time saves nine’ so it will be better to save the situation by aiming to pay back the loans you get from them now than wait till the situation gets out of hand.
Money is a very strong tool and can easily cause conflicts between parents and their children. So when money is exchanging hands, serious consideration must go into it.
The passion with which people argue over money can easily get peoples blood ‘boiling’ and words ‘flying’ which will end in arguments and relationships broken.
With that said getting family or friends to lend you money to be able to consolidate your debts can go a long way to relieve you from some stress that was associated with having so many debts surrounding you.
Getting a loan from family and friends can help you relax and pay it gradually and at a better pace than from a bank or financial institutions.
If the options above are not what you want to help consolidate your debts and you are confused, don’t think too much. Get in touch with a debt consolidation expert to explain things better to you as well as open your eyes to different options.
Two sources of debt consolidation advice
Mainly there are two places you can go for debt consolidation advice that would not cost you any money.
• A bank or credit union
• Debt consolidation experts/credit counselors
A bank or credit union
You might not know the banks and credit unions offer this service. Go to your bankers or credit union and ask to speak to someone who can help you with debt consolidation. You will most likely be given a form to fill with questions about your finances mainly.
This is to enable your bankers to know where you are with your debts or finances so they can take it from there. This service from the banks or credit unions is free.
Your bankers are there to help you make wise decisions when it comes to your finances and debt consolidation is part. Even if your bankers cannot help, they will most likely direct you to see someone who can help you.
Debt consolidation experts/ credit counselors (non-profit)
Seeing credit counselors can be the best decision a person ‘drenched’ in debts can take for his or her financial life. Having the option of seeing a non-profit credit counselor is just a better choice and feels like icing on the cake.
It is very easy to be overwhelmed and lose hope of finding a solution to your financial problems. There is no better experience than needing advice and getting it right on time. This also applies to when searching for information about debt consolidation.
When you are rejected by some banks or financial institutions when you go seeking for loans in Canada for debt consolidation, it can be devastating for you.
Imagine losing hope of finding or getting help and being told all is not lost…total relief! Thankfully there are non-profit credit counselors who will steer you towards the right direction and get some of the stress off you.
What these credit counselors will do is assist you to write down your budget which will be based on your finances and then also write down all the options available to you.
With your budget and the options put side by side, you and the credit counselor will then discuss the advantages and disadvantages of each option as against your budget.
Sometimes this process can a bit exhausting but definitely worthwhile because of the end result. The credit counselor then helps you to plan how you will pay off your debts and then how to start a new financial ‘life’ debt – free.
This is no magic, it may sound like it is but the work of the credit counselors is to help people get out of their debts. And that is exactly what they do using their expertise.
There is another option clients who have debts they want to consolidate can take advantage of.
This is known as Debt Settlement
With this plan, the client can pay his or her debts off faster without stress. The clients’ repayment is given a significant boost when creditors slash part of the principal amount the client is supposed to pay.
A very welcomed gesture by the creditors because the tenure of the loan is affected with this cut. And the creditors who are eager for their money will also receive their monies quickly.
The only downside of debt settlement is that your credit rating is affected and the probability of it affecting your borrowing in the future is high.
Interest rates of debt consolidation Canada loans
Debt consolidation loans are offered by credit unions and banks. There are several factors that come together to help a client get debt consolidation loans in Canada with interest rates that are low and affordable.
These factors include how much you earn or your income, how good your credit score is, as well as if you have collateral against the loan to be taken.
Giving the bank or credit union very good collateral such as a new car or an asset that the bank can sell to make back their money just in case the client defaults, helps in getting the loan.
The usual percentage of interest on debt consolidation loans ranges between seven to twelve percent. However other financial institutions or lenders give the loans between fourteen percent for loans that have collateral and about thirty percent on loans that don’t have any form of collateral.
Thinking of sorting out your debt problems? Debt consolidation loans for those living in Canada are the best and easy kind of debt consolidation loans you can find around.
In as much as consolidating debts or loans can prove to be a very helpful tool to manage your finances, it is not always the best when the plan is to get out of loans completely.
What most people sometimes forget is that when the loans are consolidated, the loan taken is used to pay off the debts owed. However, the consolidated loan taken becomes the full amount that the individual is left to repay. One advantage though is that the loan becomes one bulk loan and the interest rate attached to it is lower.
Another is that for the tenure of debt consolidated Canada loans, they have much longer terms as compared to credit card loans etc. So paying off the loan will take much longer than anticipated by most clients who go for debt consolidated Canada loans.
Disclaimer: All loans offered through this website are subject to credit and underwriting approval. AfterLoans.ca is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. Our lenders lend from $500-$5,000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.