Are you deeply buried in debt with pending payment of the credit card bill, student’s loan, personal loan, medical bill or any other mounting over your head? On top of that, you might have witnessed bad credit ratings in the profile with the obvious reason that you have accumulated dues to clear?
Well, what have thought next to happen? Either it will be a total bankruptcy for you or you might go for debt consolidation fiscal trick to get out of the debt slowly and gradually.
In our opinion, better to stay with the second option because in Canada debt consolidation loan with bad credit is available with some lenient terms and conditions.
In this particular blog, you will find the solution to put an end to your financial worries aside and concentrate mainly on time repayment. Here, we will be covering details on debt consolidation loan with bad credit in Canada and some queries related to the same.
So, let’s get started.
Understanding Debt Consolidation Loan with Bad Credit in Canada
Debt and bad credit very close to each other. It has no surprise to understand the fact that failed credit card and loan payments along with the accumulated interest charges exert a direct effect on the credit ratings of borrower. As a result, the ratings go down and hardly anyone can get a loan with that credit scoring scenario.
Thus, to curb the issue, debt consolidation loan with bad credit is one particular solution to end it all. It is one big loan offered to bad credit holders having innumerable debts in the profile to get rid of all the payments. Under this loan offer, you will get a sum of cash at a lower interest rate and monthly payments to square off your position with other pending dues. A specialized loan offer that helps to pay off your previous loan, credit card bill, or any other pending expenditure with ease and comfort.
Not to forget, the funds obtained from this loan cannot be utilized for personal usage except that for paying off the pending loans and payments. Moreover, it is offered despite looking at your low credit ratings.
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How Does it Actually Work?
First and foremost thing to know here is that this loan does not bring up the whole portion of funds you already owe. It is simply a new loan offered against your pending dues and provide you some relief and free fiscal hands to make the payments swiftly. Also, it works on a single creditor basis. It means, once you apply for this loan from the lender, then you have to make the payments to this single creditor only and rest of your dues will be taken care of by them.
Thus, better to analyse your situation first before applying for this financial offer. Also, note, the amount is more into unsecured type rather than the secured type. It means, you can get the loan approval for having pending utility bills, credit card dues, etc., but not for home, auto, and big personal loans.
How Can you Choose the Right Debt Consolidation Loan Lender?
You might come across a different variety of debt consolidation loans for bad credit holders. But choosing the best one is solely your decision. For the reference, you can take a look at the following few features.
- Annual Percentage Rate: APR or known as the annual percentage rate is the charges you pay on an annual basis. If you find higher APR category loan, then the interest rate will also be high.
- Loan Amount: There are lenders who are ready to offer you large sum of cash. But few put a cap on your borrowing because of too many pending debts in the past along with low credit scores.
- Fees: APR and fees are two different charges that you have to pay with the loan repayment. Always make sure to have transparent views on the fees before actually applying.
Breaking the Myth About Debt Consolidation Loans
So far, you have found debt consolidation loan as the ideal fiscal solution to take care of all your previous dues well on time. But you need to break the myth right here. This loan is best for borrowers who have the capacity to make swift monthly payments for years. It is because, this loan turns all your previous borrowings into one big loan. So, your previous interest charges and monthly payments remain as it is.
The only difference you feel is getting more time to settle the payments along with paying additional rate of interest of this particular loan as well. But in reality, debt consolidation loan does provide much-needed relief from multiple payments into one combined debt that can be taken care of easily.
Some Key Benefits of Debt Consolidation Loans
- You will only have single monthly payment to take care of.
- Consolidate all your previous debts into one having lower interest charges.
- Pay moderate amount of money every single month.
- The loan is offered for a period of 2-5 years respectively.
- No fees or charges involved, if you borrow from credit union or bank.
- It helps to save your money.
- Reduces the burden of several debts and combine into one.
Strengthen your financial position by taking care of multiple dues with one big fiscal deal of debt consolidation loan with bad credit. Control overspending and save money a little bit by paying one portion every single month. In the long run, it will help you maintain your credit scores in a matter of short time.