How Debt Consolidation Can Improve Your Financial Health
Most people will need to take out a loan at some point in their life. In fact, some may receive multiple loans at the same time and have to make multiple loan repayments.
At this point, credit (or debt) consolidation can be a smart option as it allows you to take control of your existing debts and stabilize your finances.
There are some who view debt consolidation as a threatening financial endeavor that could adversely affect their financial condition. However, this is not the case.
“Debt consolidation is for anyone who has a decent, stable source of income but is struggling to keep track of multiple payment dates or total payments,” said Rohan Hoilett, manager of retail acquisition lending at Scotiabank Jamaica.
Credit or debt consolidation is when a person takes out a single loan to pay off multiple loans such as credit cards, payday advances, or hire purchase agreements. It enables a manageable payment at an agreed time, for example at the end of the month, for the term of the loan.
For many people, this will help them better keep track of their loan repayments and potentially reduce the amount they need to put aside to pay off existing loans as the new consolidated loan could be negotiated with a longer repayment schedule.
By making timely loan repayments through debt consolidation, someone could actually improve their creditworthiness and ability to obtain future credit, if necessary. As a result, debt consolidation can improve not only your credit score but also your financial well-being.
“It actually helps to manage your creditworthiness in the sense that if you have multiple payments on different due dates, the likelihood of default or default is higher,” explains Hoilett. “With debt consolidation, you have a one-time payment on a fixed date.”
Hoilett said borrowers also have the option to schedule loan repayment at the time of receiving their salary or income, which makes it very convenient and safe not to be late.
Debt consolidation is also a great way for borrowers to benefit from lower interest rates during times of falling interest rates. Getting a new loan at a lower rate to pay off higher interest loans would mean additional savings that could lead to more disposable income that could be used for savings to build your wealth.
Scotiabank offers attractive rates and conditions for people interested in debt consolidation.
The bank offers both secured and unsecured Scotia plans or “bonds for any purpose” at attractive rates and is currently offering a 50 percent discount on processing fees.