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Published On: Fri, Dec 30th, 2016

Debt Consolidation Take 5 – Why Take the Debt Consolidation Route

There are numerous debt relief and management processes. They include budgeting, living within your means, debt relief, debt settlement, debt management, and bankruptcy. Despite these avenues, when you are in debt, the first place and option that you will think of is debt consolidation.

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What is debt consolidation?

This is simply the process of bringing together your multiple loans into one larger loan that is repaid monthly. It is often considered the best way to get back in control of your finances but everyone applying for these loans has their reason.

What are the reasons for taking debt consolidation loans?

There are many reasons that vary from person to person. However, in most cases, people take debt consolidation loans for the following main reasons:

  1. To know amount owed

It is good to know how much you owe the different creditors in your life. When you have bills, personal loans, student loans, a mortgage, and credit card loans, it gets really tricky keeping track of all the details of these debts.

Therefore, you may opt to use debt consolidation so as to get a view of how much you owe your creditors. This gives you a clearer vision of your financial situation.

2. To pay lower monthly interest rates

Consolidation of all debts into one big loan makes it possible for you to pay lower interest rates. In most cases, the debt consolidation loans come with lower interest rates making the payments more manageable monthly.

Before signing the loan agreement or contract, make sure that you make your calculations or consult a financial expert to ensure that you don’t pay more than you need to. Some debt consolidation plans are expensive and this is also why you should shop around to ensure that the plan you sign up for will save you money.

3. The wish to control your finances

Debt consolidation is an effective financial management solution. If you are looking for a way to get all your finances in order, then debt consolidation made super easy by innovative institutions will help you achieve this.

Consolidation gives perspective into all that you owe and this helps you to change your spending and develop better ways of repaying all your debts in time.

4. To make one monthly repayment

If you are grappling with a number of debts expected to be repaid monthly, then you should consider debt consolidation. With many debts to repay monthly, there is a big chance that you will forget to repay one or more and for this, you will have to pay the late fees. To avoid any of that from happening, you should take up debt consolidation. This reduces transaction fees on your bank account as well and there will be no late fees charged for forgetfulness.

5. Zero effects on your credit rating

Unlike other debt management options, debt consolidation doesn’t affect your credit rating. This is because you will have one bill monthly and therefore no accounts with balances falling behind.

In conclusion, debt consolidation is the best debt management solution if you are ready to turn things around financially and control all the money that goes in and out of your account. If you are applying for debt consolidation for these reasons, then you are on the right track.

Author Bio

Charles Posner is a certified credit counselor. For more on debt consolidation made super easy tips, check out his LinkedIn page and Twitter profiles.

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  1. Andy Brown says:

    This article describes about the why take the debt consolidation route. There are five important things which will lead to the burden of debt and the credit card and loans are one of them. When you are unable to manage your existing loans as there may be too many lenders involved, it is natural that you would like to cut down on the number of creditors that you have to handle. Fewer creditors and easier repayment terms would make your job much easier. To make it happen, you have to take the debt consolidation route. All the sources have their own advantages. You have to choose accordingly which is best suitable.

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