When you find yourself in a place of overwhelming debt, it can be a difficult position to get out of. You find yourself spiralling into further debt while trying to find your feet and get on top of your finances. Debt consolidation is one option that can not only help you get on top of your finances, but can see you out of debt altogether. However, the question is, does consolidating debt save money?
What Is Debt Consolidation?
Debt consolidation is the process of taking out a whole new loan to cover other loans you are currently paying off.
Picture this: you have five different loans you are paying back from five different lenders. They are all for different amounts and with different interest rates. Not only this, but the repayments are all due at different times of the month. This is a lot to stay on top of. It’s no wonder you end up spiralling further into debt.
A debt consolidation loan is a great solution. By taking out this whole new loan to pay them off, you only have one loan, one interest rate and one repayment. It is much easier to manage and stay on top of, making it a great solution to help you get out of debt. But, does consolidating debt save money?
Does Consolidating Debt Save Money? What Are The Benefits?
Before looking at the question: does consolidating debt save money, let’s first take a look at some of the other benefits that come with it.
- One simple payment: this is one of the biggest bonuses that come with a debt consolidation loan. Instead of managing multiple debts with different interest rates, repayment amounts and repayment times, you now have just one to worry about. This makes it much easier for you to track and get on top of. You just have one repayment at the same time each month that can be factored easily into your budget.
- Less stress: let’s face it, having multiple loans is extremely stressful. If you are dealing with different lenders, the communication itself is a lot to stay on top of and manage. Debt consolidation takes away all these stresses. With just the one lender to worry about, you will find yourself with a lot more free time to focus on other things.
- Boost in credit score: taking out multiple debts and struggling to pay them back can often result in poor credit. Whether you have been late with repayments or missed them altogether, this is reflected in your credit score and can affect your future chances of being able to take out a loan. A debt consolidation loan can actually give your credit score a boost. As long as you are able to make the repayments on time each month, it will help improve your credit score and set you up as a reliable borrower.
These are just some of the benefits that can come with taking out a debt consolidation loan. But, does consolidating debt save money?
Does Consolidating Debt Save Money?
While there are so many benefits to debt consolidation loans, one of the main questions people want to know is whether or not it will actually save them money. The answer is yes.
Interest rates: Before taking out a debt consolidation loan, you can shop around and make sure you are getting the best possible interest rate. The new interest that comes with a debt consolidation loan is often reduced against what you’d pay on credit cards. It can definitely lead to you saving money over the course of the loan.
Pay it off faster: It can also save you money by helping you pay off the loan faster. The faster you are able to pay off a loan, the less you have to pay off in the long run in interest, which can save you money. As you as you are able to stay on top of the repayments, then you will find a debt consolidations loan is a great way to not only get on top of your finances, but also save some money in the process.
It’s important to take a look at your own situation before taking out a loan and consider what is best for you.
Now we have answered: does consolidating debt save money? It’s a chance to take a look at what debt consolidation can do for your individual circumstances. The team Debt Consolidation is on hand to help you out. Their expertise when it comes to debt consolidation loans means they can provide you with the best options that suit your individual circumstances to help you both save money and get out of debt even faster. Be sure to pick up the phone and give them a call today.