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Debt Consolidation
What is debt consolidation?
Debt consolidation is replacing several debts with one. You borrow enough money in one loan to pay off many other debts.
For example, if you have unpaid balances on four credit cards, you might get a debt consolidation loan to pay off all four. You would then have a single payment to make each month.
Why might I want to consolidate my debts?
People like debt consolidation because it makes their life easier in these ways:
- Easier cash budgeting, with one predictable monthly payment instead of several.
- Lower payments, because a debt consolidation loan often has a lower interest rate than unsecured debts such as credit card accounts.
- Lower payments, because a debt consolidation loan may have extended terms.
How can I get a debt consolidation loan in Canada?
Apply to a bank, or other lender, with enough support to make them feel confident that you will repay the loan. To make your case, you will need to provide:
- Your monthly budget, showing that you can afford the loan payments.
- Evidence that you have enough income to make the payments. This could be your pay stubs, for example.
- Extra security, either collateral (perhaps your house or car) or a co-signer.
Should I go for debt consolidation?
It sounds great, until you dig beneath the surface. There are some definite risks and disadvantages to weigh against the advantages. For example, if you are not absolutely sure that you can make the payments, do you really want to risk losing your house?
We suggest you research your options before deciding if a debt consolidation loan in Canada is the best option for you. To help, we have prepared the following articles to explain debt consolidation loans and the way they work in more detail:
Student Loan Debt Consolidation
Debt Consolidation Services – Why Should I Use One?
Credit Card Debt Consolidation: Should I Consolidate My Credit Card Debt, or Just Go Bankrupt?
Bad Credit & Debt Consolidation Loan: Can I Get a Debt Consolidation Loan Even If I Have Bad Credit?