Introduction
There are many ways of seeking to deal with debts; one of them is loan consolidating which refers to a process where the several high interest loans are put together in to one monthly payment. Loanconsolidating offers several benefits that help the debtor to deal with their outstanding loans quickly. The following are the advantages that one gets in loan consolidating:
History
Financial counseling-the financial facility offering to take up your debts is likely to engage with you and ask tough questions about your financial health. They will examine the amount of debt that you have as they seek to figure out the total amount of your debt. The financial counseling sessions are aimed at assisting the debtor to examine their life critically enough and together with the financial institution find out all the avenues that can be used to reduce your loans.
Less collection calls-One of the great advantages of loan consolidating is that once you have signed the agreement forms and informed your debtors of enrolling in to loan consolidating program they are bound to stop calling you as they seek to collect their arrears.
Features
Single monthly payment-Loan consolidating programs require the debtor to make monthly payments towards your debts. The company then distributes the funds among all your creditors accordingly. The advantage here is that you get to pay only to one account unlike previously when you had to deposit money in to various accounts; this serves to reduce interest rates thus helping you to repay the debt easily and quicker.
Elimination or reduction of late repayment fees- Most creditors have charges for late payments or defaulting, these can accrue with time and add to the burden of loan repayment. During loanconsolidating one renegotiates with the facility to either eliminate or reduce the fees.
Tips and comments
Improving credit scores-Today there are credit bureaus that help to monitor people credit worthiness, late repayments and defaulting lowers your credit scores which means that fewer financial facility can consider offering you credit. Loan consolidating helps to improve your credit scores as your debts start getting paid. Once the debts are paid off the loan consolidating company negotiates with the credit rating company to improve your ratings.
Get debt free faster-As you pay off your creditors’ a little more than the minimum it accelerates your rate of debt repayment. This has the effect of ensuring that you don’t carry on with repayments for too long thus quickening your recovery towards being debt free. Loan consolidating program can make it possible to repay the debts in just 4-6 years instead of the average 20 years.
Debt repayment plan –Once you join loan consolidating program you will need to get a new debt repayment plan from your creditors. The new plan is supposed to ensure that you don’t default on your debt repayments so that you get to repay off at least the principal balance in full along with some interest.
Interest rate reduction-Loan consolidating goes a long way to reduce your interest rates on debts; this is achieved by negotiating with creditors usually through the debt consolidating company.
