How to save money with loan consolidation

Debt is not new topic for most people. It has helped some people through difficult times. However, debts have also trapped some people in a vicious cycle. Debts should be managed carefully. They are headaches to deal with and it is worse if you have more than one debt to repay.

Debts come in all forms, from car title loans, payday loans, student loans, credit card loans, cash advances and the list goes on. All In all these have to be paid back in full. This is where problems happen. With the high interest rates on these types of loans, you will be spending a lot of money on loan repayment.  

With debt consolidation loans, you have a chance to reduce the amount of money paid. Consolidated loans work in such a way that the lender grants you a loan to repay all the debts that you may have, then you are left to slowly repaying that loan back slowly.

How can loan consolidation help?

 

  1.     Lower interest rates
How can loan consolidation help?

How can loan consolidation help?

Typical loans have quite high interest rates. Interest rates are even higher in loans such as  payday loans and car title loans. These loans typically have annual percentage rates ranging from between 250%-450%. This translates to between 20% and 38% of the loan amount. If you have more than one loan with such high interest rates, you are definitely going to feel the pressure.
Loan consolidation could help to solve these issues. It gives you the chance to get out of all these debts, and gives you a reasonable interest rate that matches your monthly income. In doing so, you save a lot of money on interest rate.

Every borrower dreads the inability to repay a loan due to rising interest rates. A consolidation plan keeps you out of such situations. All it requires from you is to do the math and make sure that the consolidation plan works for you and not against you.

  1.     Roll overs and payday cycle
 the ultimate way out of debt

the ultimate way out of debt

Assuming you took two or more payday loans. Now you know that when it come to payday loans, you have to make the payments in a lump sum all at once. However, you may be facing hard times and you are forced to apply for a postponement of repayment. This leads to the rollover situation which involves pushing the repayments to the next month. The lender may also subsequently review your interest rates and add other fees and penalties. If roll overs are done frequently, your debt grows and you may fall into a payday cycle scenario which you have to keep coughing up money every month to servicing loans that seem never ending. This is where you need to consolidate loans

For this reason, consolidation loans have become the ultimate way out of debt and at the same time save a large sum of money. The consolidation loan lets you clear up the debts that you have and help you avoid the lethal payday cycle. You have just a specific amount of money as to pay each month, for a specific time until you can repay back the loan.

  1.     The “good credit” factor

Financial decisions are and should always lean into the future of the individual in question. By saying this I mean you have to make a decision that ensures that your future is guaranteed to be easier that the situation you are presently. Look at it this way, you may require to take up an unsecured loan. Depending on your credit score, the interest rates will lean in that direction. If bad, then the interests will be high, but if it’s good, the interests will be lower.

Debt consolidation helps you build up a good credit score. This is because it moves you away from the numerous monthly payments that you are prone to skipping or forgetting. You now have just one monthly payment to focus on. When you follow up all repayments on time, you get to improve your credit score. This may mean you have a brighter financial future. With a good credit score, you can get a traditional bank loan with affordable interest rates. You have less to pay when it comes to loans in the future, thus saving you money. A debt consolidation loan is a great money saver for most people who know how to get the best out of it. Bad Credit Consolidation loans are also available with few lending institutions

Benefits of debt consolidation

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.

  1. Single payments

Single payments

Single payments

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..

  1. Less stress

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.

  1. Lower interest rates

Lower interest rates

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.  

  1. Stop collection calls

Stop collection calls

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.

  1. Credit score

Loan consolidation can improve financial situation

Loan consolidation can improve financial situation

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.