Being in debt – whether that’s one bill or several – can be stressful for anyone, and getting on top of it can seem impossible. Debts can be easy to get into and hard to find a way out of, and before you know it, you have multiple lenders attached to your name. In situations like this, debt consolidation loans can be a sensible option – offering you a chance to create a more manageable situation.
Today’s post is going to look at some of the benefits of taking out a debt consolidation loan and how it could help you manage your debt.
Allows you to make single payments
The most obvious benefit of a debt consolidation loan is that it combines all of the debts you have, turning them into one monthly payment. Not only this, but it tidies up your bank account and its outgoings. Having more than one debt will often mean that you’ll have several different monthly deadlines to meet, as well as variations of the amount you’re paying back depending on added fees.
Transferring your debts into one payment makes paying bills more manageable, as it’s far easier to keep track of one payment than several, and this also allows you to budget more efficiently. By knowing exactly what’s coming out of your account and when, you’ll be able to effectively plan your outgoings to ensure you can cover the payment.
Consolidating bills into one payment also means that you only have to deal with one lender. Numerous debts can lead to calls and letters from different companies demanding repayments, whereas, if you consolidate all of your debts into one single loan, you’ll only ever have to deal with one company.
Helps you become debt-free sooner
One of the main issues with not being able to get out of debt is the constant interest added to your payments. The longer you don’t meet payments, the more interest is added on – making it almost impossible to pay back. If you have multiple debts and constant additional fees are being added on, you probably feel like you’re in a never-ending cycle and can’t see a point where you’ll be debt free.
A debt consolidation loan will often come with low interest rates in comparison to what you’ve been paying, so have a look around at different interest rates to ensure you get the best deal. Most of the time, you’ll find yourself paying less in the long run because the loan will allow you to manage the debt payments efficiently and affordably, and lead to paying the debt off faster – so ultimately, you’ll be in a position to achieve financial stability sooner.
Improves your credit score
Every time you miss a repayment, it has the potential to hinder your credit score, which could prevent you with future mortgage or finance applications. With this in mind, it’s important to get your debt under control so that you can start working on rebuilding your credit score and putting yourself in a better financial position.
With your debts consolidated and your monthly repayments at a more realistic level, you can start focusing on bringing your credit score back to a healthy level again. Don’t underestimate the power of this – as a negative credit score can impact any future borrowing, including car finance, mortgages and more.
Reduces stress
With debt comes stress, and lots of it, especially when you have numerous debts to pay! Always worrying about debt has a knock on effect to the rest of your life and will probably prevent you from meeting repayments. A consolidation loan enables you to focus on one payment in a manageable way, meaning you have less to worry about.
As most debt consolidation loans give you an extended period of time to pay the loan back, you don’t have to worry about paying it back quickly. Getting all your debts in one place, with one payment and dealing with one company will help to manage the stresses you’ve previously experienced and allow you to relax knowing that your debt is now under control.
Managing debt is hard, but there is an end goal and you will be able to get out of it with careful planning and budgeting. For more information on debt consolidation take a look here and consider the benefits mentioned above when making your decision.