Ali is a young individual with a number of debts to her name as a result of a student loan she is paying off, a clothing account and a credit card payment she is struggling to keep up with. She has been juggling the various debt repayments, without much success and is considering the benefits of consolidating debt as a result.
Ali will have the benefit of being able to have only one loan amount to settle. She will no longer have to keep up with multiple payments. In addition, the debt is ultimately paid in full, without any negative consequences to your credit.
One of the goals when consolidating debt is to lower the interest rate.
Using unsecured loans for consolidation is quite common. This means that there is no property at risk. There are also options to consolidate through secured loans.
Provides financial relief – Ali will get financial relief. The total amount of debt that she owes is going to be bundled into one amount, which means that she won’t have to remember multiple amounts. Ali will have the benefit of potentially having extra money available, as a result of interest saved.
You may be able to pay the debt off sooner– Instead of having to pay added interest amounts, Ali will be able to settle her debt much faster.
You are less likely to make late payments – One of the benefits of consolidating debt is that you won’t make late payments, which means that you will save more in terms of the interest paid. Ali won’t have to keep up with multiple debts, so she is more likely to pay what she owes on time.
A key part of the process is keeping in mind that she may not qualify for the debt consolidation process and that approval may be dependent on how bad her financial situation is.