Debts have heavy burdens for a lot of people in the recent years. Debts can range from payday loans, credit card loans, student loans and cash advance loans, among others. All of them have one thing in common – stressing you out financially and emotionally. It’s never easy to get out of debt, more so if you are juggling repayment of two or three debts. The situation is worsened by roll overs where the outstanding amount is rolled over to the following month and interest rates increase as a result.
Most people decide to look for ways out before they are crippled by their financial woes. One alternative is consolidating your payday loans. This plan involves getting a loan that covers all your debts and their interests, then repaying it back slowly.
Direct loan consolidation comes with a lot of benefits as it is a lifeline for your financial difficulties.
Here we are talking about the borrower getting the ability to move from numerous debt consolidation, to just one. As it is the arrangement of debt consolidation, the borrower gets a loan that covers all the debts that he may have. He repays all of them and is now left with just one single payment to take care of. The borrower now just needs to service one loan monthly, as opposed to having juggle several loans..
Debts are stressful. Debt consolidation loan helps relieve the financial stress you are having. The fact that you now only have one loan to service may relieve some of your pressure. It gives you some breathing space to get your financial situation in shape. It lets you focus your energy on other meaningful aspects of life and not just worrying about drowning in debt.
Lower interest rates
Loans like payday loans, cash advances, credit cards loans all have very high interest rates. Imagine the terrible financial situation if you have more than one loan to repay. In the instance of a payday loan, it usually has an annual percentage rate of about 300-350%. This translates to about a very high 25% interest rate monthly. The stress would be unimaginable should you have to repay 2 or 3 of such loans.
Now if you have a consolidation plan for the loans, you have a huge burden taken off your shoulders. You can move from paying large sums of money monthly in interest to just one monthly payment with a lower and standardized interest rate. Repaying your debts becomes easier.
Stop collection calls
One of the worst things that could happen should you have debts is the debt collection calls from collection companies. You have debtors breathing down your neck all the time.Imagine the pressure you would be facing every time the phone rings. Living with such anxiety is unbearable. Your best option is to get out of these debts as fast as possible.
Debt consolidation can help you eliminate the number of debtors coming after you. Debt consolidation allows you to negotiate your stand and try to match it with the current financial situation that you may be in. Debt consolidation loans help you get out of debt so that you could be leading a normal, debt-free life again.
Many people have bad credit scores. Credit scores are badly affected by making late payments all the time. It could worsen to a point that you cannot apply for a traditional loan and get a good interest rate anymore. With nowhere to get a loan, bad credit score may push you into getting loans that are more risky than the traditional bank loan, which is akin to jumping from the frying pan into the fire. You may just plunge into worse financial situation.
Loan consolidation is a solution that could improve your dire financial situation. You get a loan that repays all the debts you had in the past. Before taking up a consolidation loan, you had so many loans to service that could lead to late repayments. With a consolidation loan, you just have one repayment to make every month. Now, if you keep up with that one repayment every time, your credit score actually improves. This could mean you could qualify for a traditional bank loan with good interest rates in the future.
Debt consolidation puts your finances in order and it makes quite a good long term financial plan.