What people want the most is to get out of dept. When dealing will lots of different debt, sometime the best thing to do is to consolidate it. Debt consolidation won’t eliminate your debt but it will make it easier to get rid of it. By consolidating your debt, you will have the option to pay it off faster and not spend as much on interest payments. Here are 5 benefits to consolidating your dept.
Reduced Interest Rate
Typically for someone with bad credit, they may have interest rates of18% or higher. By acquiring a debt consolidated loan, you can usually find a loan with an interest rate of 9% or lower. This adds up to a huge savings in the long run and by paying less interest, you will be able to pay down the debt faster.
Lower Monthly Payments
Consolidating debts should result in a lower monthly what you are paying now. This is because you should be getting a lower interest rate on the loan. Lower interest rates and a longer term loan will result in smaller monthly required payments.
When you have multiple debts, you will have to manage many different payments each month. With different due dates for each payment, managing them can get confusing which may result in missing payments. By consolidating, you will only have to worry about making one payment. With only one payment, you won’t have to worry about forgetting to make a payment.
No More Late Fees
Getting a loan to consolidate debts will eliminate all of those other debts with their late fees. These fees can easily increase a person’s debts and make it even more difficult to become debt free.
A consolidation loan is a much better alternative than filing for bankruptcy. Bankruptcies are public records that will stay with a person for quite some time. This will be something that shows up on your credit report for at least 7 years. It can lower a person’s credit score by as many 200 points, making it extremely difficult to get new credit at reasonable interest rates.