Debt consolidation is a form of loan that aims to pay a higher risk loan. It is like borrowing money to pay an old debt. However, other people see this process as a riskier loan because you will have to agree to some form of collateral. For example, you will agree to put up your house as collateral in exchange for a bank to buy your credit card debt. The thing is this solution applies to many especially during tough times and is considered to be one of the best solutions to avoid having bad credit history. Well, let us take a look at some of the advantages of debt consolidation.
One of the advantages of consolidating debt is its ability to reduce interest rates. If you will have such companies to do the job for you, there is a possibility of paying a lower interest rate of up to 3% depending on what you will agree upon. For example, you have three credit cards at 10% interest rates each; once a specific company takes over the payment for you, the interest rate can be reduced to 8% each cards giving you an average of 8% monthly interest rate.
Aside from lower interest rate, this kind of agencies aims at helping you pay your debt to avoid having bad credit and at the same time ensuring that they will get their money back. Hence, it is part of their plan to present you with a debt repayment plan that you should follow within your own budget. Most of the time, these payments are on single monthly payment scheme making payment easier. You won’t have to go to different banks and institution anymore to pay your bills.
With the monthly payment scheme arranged by your chosen debt collection agency, there is a small possibility that you would be facing any late fees and past dues. If you will follow their debt repayment plan, there is an assurance that your debt will be settled on time. No more worries of getting calls from any collection agencies. Also, since you are no longer late on your payments, it will definitely help you boost and improve you credit score. Again, this process is being done not only to help you pay off your debt but also to help you maintain a good credit standing.
Aside from all the financial help that you can take advantage with consolidating debt, there are agencies that also offer debt counseling. These counseling will allow you to organize your financial status, discuss your debt and help you find solution to resolve a possible or impending bad credit.
With all the positive things that you can get from this process, wouldn’t you want to try it for yourself?