It is no doubt millions of people are struggling with late payments while others are completely unable to meet their repayment terms. With the current coronavirus pandemic, more and more people are going to get stuck with their loans, risking foreclosures and repossessions. While the government has announced a raft of economic stimuli packages aimed at boosting the economy and helping people overcome the effects of the pandemic, it is still not guaranteed that all shall be fine in a matter of months. So how can those in deep debts get out of bad loans even as the situation worsens? Well, if you are one of those grappling with whether or not to consider bankruptcy because of too much debt, you have a reason to sit back and think about debt consolidation.
Debt consolidation is the approach people use to get a reprieve of reduced monthly installments, fewer creditors, and peace of mind. In fact, one of the reasons many people go for consolidation of loans is to significantly reduce their debt and save money in reduced interest rates. But debt consolidation can also offer numerous other benefits. As a person whose debt burden has been reduced, you not only enjoy financial benefits but also psychologically feel relieved.
By switching your debt obligation from a high-interest rate to a lesser installment is a major benefit you don’t want to miss. When a loan is consolidated, a loanee is able to dramatically reduce his or her loan with the same monthly repayment. What this means is that a reduced interest rate translates into more money going towards clearing your principal amount of loan, thus reducing your debt balance faster than you would have reduced had you been servicing a high-interest loan. What’s more, you will significantly reduce the amount of time you will need to pay off your loan provided you are not adding an extra debt on top of what you already have.
Today, an average American cardholder holds 7 credit cards. This means that together with other possible loans such as car loans, student loans, or a mortgage, many people are far too indebted and they risk failing to completely pay their loans. Because of the shrinking incomes and the rising cost of living, it is practically impossible to fairly allocate the small income to meet the expected monthly repayments of all these loans. The best-case scenario is that in the circumstances, you can only pay a small fraction on each of the loans and when repeated each month, chances are you sliding from a bad to a worse debt problem. However, consolidation can provide a much better and easier way of dealing with a single repayment that when juggling between numerous debts.
