Debt consolidation is a debt management and relief strategy developed for individuals, organization and even nations with the objective of achieving debt freedom. Debt consolidation is the refinancing of one or several individual loans merged into one loan for the purpose of repayment and using this single loan gotten at the reduced interest rate to offset it. Debt consolidation is similar but different from debt settlement and should not be misunderstood to mean the same thing.
There are many reasons why you should consolidate your existing loan into one. Many advantages can result from consolidating your loans i.e. credit card loan, real estate loan, medical loan, student loan etc. into a single personal loan, Some of the advantages of debt consolidation includes:-
DEBT TRACKING MADE EASY
Instead of having several debts whose repayment plan you will need to track individually in other not to miss out on your monthly payment, a single consolidated debt loan is easier to track since it is just one loan and you only need to track one repayment plan, Just one creditor to repay.
REDUCED INTEREST RATE
With Debt consolidation, you are provided with an opportunity to have a reduction in the interest to be paid on your loan, often times debt consolidation enables interest rate reduction, a debt consolidation company or organization negotiate on your behalf and most time obtains more favorable discounts on interest rates for you.
SINGLE SUSTAINABLE MONTHLY PAYMENT
Using debt consolidation as a means of gaining debt freedom enables the debt consolidation company to draw up an actionable plan which is easier for you and also sustainable via a single monthly payment. You only need to make one payment every month to the debt consolidation to offset your myriads of debt.
NO PENALTY TO PAY
Since you only need to make one payment every month to offset your indebtedness, you can never be caught unaware. Penalties arising from late payments are therefore eliminated. You are indeed on top of the game which makes your decision to consolidate a wise choice.
CUSTOM DEBT REPAYMENT STRATEGY
You together with your preferred debt consolidation company agree and draw up an actionable strategy for exiting the debt. This strategy and plan of action are customs made for you and as taken into consideration your financial status and profile so as to make repayment easier on you. You now have a workable program which is sustainable and can be financed easily. This to me is a major advantage of debt consolidation.
EXIT DEBT FASTER AND IMPROVE YOUR CREDIT RATING
Debt consolidation will help you exit the rat race of debtors and improve your credit ratings especially since you still have to pay off the loans.
In summary aside from the above-mentioned advantages, other reasons why you should consider consolidating your debt includes the opportunity to get a free debt assessment and counseling, get faster debt relief service and opportunity to get rid of various collection calls. Like I always advice working with a professional financial planning advisor will put you at a bigger advantage and help achieve your financial goals more rapidly.