A debt consolidation loan is vital to borrowers because it assists in settling debts through refinancing them and making your life easier. It’s a type of loan settlement process whereby a borrower takes out a single loan to pay off the multiple loan accounts. Usually, a debt consolidation loan entails a combination of auto loans, medical debt, credit card debts, or student loans, making them a single loan.
Besides the reduced interest rates, debt consolidation loansallow you to repay your debt quickly in a less stressful manner. It’s necessary to handle your debts responsibly. It helps to avoid experiencing setbacks such as being unable to afford other needs.
The US offers loan consolidation to the borrowers of federal education loans, including graduates and school dropouts. Debt consolidation loans at freedom debt relief can rescue you when you have taken a car or an apartment loan, and you want to roll them into one single manageable account.
Therefore, it’s important to understand the pros & cons of a debt consolidation loan at Freedom Debt Relief before committing to a new loan.
Advantages of a Debt Consolidation Loan
i) Improved Credit Score
When you pay a single monthly bill on or before the due date, you significantly raise your credit card score. It’s achievable with the help of a debt consolidation loan. Moreover, the improved credit score will eventually increase your chances of securing other loans in the future when the need arises.
ii) Helps in Paying Off Debts Faster
Due to unavoidable circumstances, you may take a long period to settle your credit card balances. A loan consolidation process involves rolling multiple debts into one loan structure before establishing the loan repayment period. Debtors can then negotiate on repayment terms and policies they can afford to adhere to, which helps pay off debts faster.
iii) Lower Interest Rates
It is common for unsecured debts to incur high interest over time, making your loan expensive. Getting a debt consolidation loan at Freedom Debt Relief can help you to pay off the debt using a single account with lower interest rates, saving you some cash.
Additionally, debt consolidation loans for borrowers with good credit scores ordinarily have lower interest rates than the average credit card subscribers.
iv) Turns Multiple Payments Into a Single Payment
With several debts, it’s advisable to consolidate every loan into one single source to minimize the struggle to settle multiple accounts. The debt consolidation process makes your debt repayment more manageable; it turns various payments into a single payment.
Furthermore, you may even reduce your monthly settlements due to an extended payoff period. It, in turn, reduces the stress of having to adhere to multiple loan repayment deadlines. This makes you concentrate on only one deadline.
Disadvantages of a Debt Consolidation Loan
i) Upfront Costs
Loan origination, debt counseling, and balance transfer fees are some of the upfront costs you may be required to pay before taking a debt consolidation loan at Freedom Debt Relief. It’s therefore vital to understand the additional costs required, including late payments and early repayment, before opting for a debt consolidation loan.
ii) Not a Favorable Option for Long Term Solutions for Financial Problems
Sometimes, debt consolidation loans are not a favorable option for long-term solutions to financial problems. It is because the loans don’t guarantee that you won’t go into debt again. You should avoid living beyond your financial capacity, making a realistic budget, and adhere to it strictly to avoid going into debt you can afford. Therefore, you should build an emergency fund that will help you sort unexpected financial needs rather than using credit cards.
Get a Comprehensive Debt Consolidation Loan at Freedom Debt Relief
Debt consolidation loans help in managing financial stress as you work on reducing debt. In the long run, you get to save some money. To get a comprehensive debt consolidation loan at Freedom Debt Relief, talk to a financial adviser who will also help you get solutions for other economic issues you experience.