Debt Consolidation - Will It Reduce My Monthly Payments?

Qualify for Consolidation loans in Canada - make your loan go further to pay down more debtsIn the right situation, a debt-consolidation loan could be the best way to control consumer debt interest levels and maintain or repair credit history.

But what exactly is a consolidation loan?

In its most basic form, a consolidation loan is one where a bank (or another lending institution) provides you with a loan specifically to pay-out other credit debt. Often, the debts being paid-out, or "consolidated", are usually high-interest credit balances, accounts in the arrears or both. The monthly minimum payments are also consolidated in one monthly payment.

Here is a typical case of how a consolidation loan works:

Credit card # 1
Balance: $7,800.00 @ 19.5 APR (%) = $125.01/month interest charges
Credit card # 2
Balance: $5,780.00 @17.9 APR (%) = $85.03/month interest charges
Retail card
Balance: $3,130.00 @ 23.4 APR (%) = $60.19/month interest charges
Line of Credit
Balance: $17,340.00 @ 7.5 APR (%) = $106.89/month interest charges
Overdraft
Balance: $2,578.00 @ 28.5 APR (%) = $60.39/month interest charges
Total amount of debt: $36,628
Total amount of monthly interest: $437.51 Amount you pay out monthly WITHOUT reducing your balances
With a consolidation loan of: $37,000 Amount required to pay all debts
Total Monthly interest charges: $258.49 at an APR of 8.5%
Total Monthly interest savings: $179.02 EVERY Month - What would you do with this money?

The $180 monthly savings would best be utilized to repair your credit even further.


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How To Qualify For a Consolidation Loan

Consolidation loans are generally accepted as the most fundamental solution for high-interest debt and credit maintnance. Usually, these consolidation or "debt pay-out" loans are structured in a manner such that the normal overall monthly minimum payments are slightly reduced, depending on the term of the loan. In situations of high-interest balances and/or recently delinquent accounts, Canada Debt Settlements will always recommend to the client to apply for a consolidation loan prior to other options, where the expectation of an approval is reasonable:

  1. Sufficient income* in relation to overall debt (see Total-Debt-Servicing Ratio)
  2. Reasonable Credit Rating History (see Credit Rating System & Beacon Score)

Risks of Secured Consolidation Loans

Where the applicant has accepted a secured consolidation loan (secured against equity or other assets), the lender may reposses or liquidate in the event that the loan payments fall behind. There is very little "gray area" with respect to these types of loans.

Where the applicant has attained a co-signer to strengthen the application, the co-signer will be as susceptible to the same credit & legal risk as the primary applicant as they take on the same amount of liability to ultimately pay back the low-interest consolidation loan.

Will a Consolidation loan reduce my debt?

There is NO principal debt reduction in a consolidation loan.

The fact remains that every application for credit affects your beacon score negatively, moreso when the application is declined. If the applicant is a property owner with sufficient equity or holds other assets (i.e. GICs, RRSPs, bonds, etc...), the bank may offer to secure the loan against these assets, and essentially hold them as collateral until the consoldation loan is paid. These are known as Secured Consolidation Loans, where in exchange for a low-interest loan, the lender will secure that amount against an asset of the loans value.

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Canada Debt Settlements stands by the commitment and service guarantee that no client will be charged unless we can achieve a debt reduction. As our customer testimonials will demonstrate - we have a unique solution that allows a licensed agency to advocate with your creditors on your behalf. We work for YOU... not the creditor. Call now to speak with an experienced and licensed debt professional. What do you have to lose?

Another Successful Debt Settlement...

I must say that I always ‘do my research’ in every area of life as best as I can so that I make the right purchase the first time. Well, this was not an area I was even remotely able to make a definitive call on since my wife and I never had any previous debt issues.
I researched and met up with many different Debt Resolution/Debt Solvers and tried to work with making monthly lump payments but it wasn’t the correct solution and in the end failed for us. I started researching into solving our Debt problems all over again when I came upon the idea of Debt Settlement…that was the correct solution and something my wife and I should’ve done the year before. The problem was who could we trust to do it and who was the best person for the job. That was our newest problem.
I started making calls and looking up as much information as I could get on the Companies that did this and I was confident that Canada Debt Settlement were the tops in this area so I called and spoke to Boaz. I was actually somewhat shocked as he had answered my questions and explained the way it worked so well I had no more questions the next day. This was a relief as the time frame for us was very tight and to this day I am amazed that everything was settled going right down to the wire on our tight schedule and that Boaz still managed great savings for us in the process. It pulled us right out of debt and had we called Canada Debt Settlement the year before we would’ve saved even more and not carried that Debt burden unnecessarily for an extra year.
If you’re doing your research looking for who is the right one for the job, I can honestly tell you save your time and money and go with Canada Debt Settlements. I would be happy to talk to anyone that has any uncertainty as the expertise and hard work Boaz did for us was truthfully incredible.
S.B. of Mississauga
Received Dec 23, 2013 via email
Total Savings: $18,000+


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