October 04, 2010

Manage Your Credit Situation With Debt Consolidation

Only One Outstanding Loan

Roughly, debt consolidation consists of regrouping multiple debts and taking out a new loan that will allow you to settle all debts at once.

This will leave you with 1 single loan and 1 single payment to handle. It also can enable you to sometimes get a better rate of interest than some of your previous loans.

Be Sure to Carefully Check the Conditions

However, debt consolidation is not a miracle solution and you should be wary of conditions that are not always beneficial to you.

Some credit companies will offer loans under doubtful conditions that will reduce each payment but will only defer the problem.

Doubtful conditions such as:
  • Higher interest rate
  • Abusive administration charges or fees
  • Second mortgage on your home (sometimes even a 3rd, 4th, …)
  • Extended term


Also beware if you ask someone to endorse you, this person is responsible for completely paying your loan if you do not meet your obligations. This could put a friend or a member of your family in real financial trouble. Endorsement can easily destroy relationships.

A Great Move to Improve your Credit Situation

In contrast, a well prepared debt consolidation application supported by a good plan will demonstrate you are serious and will encourage institutions to lend you money under better conditions.

For additional information follow link to
Industry Canada’s Office of Consumer Affairs (OCA) publications:

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