Many individuals in Canada specifically GTA consider a consolidation loan or debt consolidation in Toronto as the first step to debt relief. However many people are hesitant to visit their current financial institutions such as a bank or credit union as they fear that it will look negatively on their credit. In addition, if they have a mortgage or line of credit, they wonder if the inquiry will set off alarms and affect whether or not the financial institution will offer them a new mortgage when their current mortgage expires.
The above especially hits home for people currently out of work or those self employed. Self employed people have the toughest time to qualify for loans as they may not be taking enough salary out of the company to meet institutions criteria for loaning money.
By the time most people seek a debt consolidation loan, their credit rating has already deteriorated or if they lack collateral, they may not be able to get a loan. Even though in most cases, the consolidated loan on a monthly basis would be less than what they are currently paying.
In most cases when you do secure a debt consolidation loan there are many benefits. Typically these are:
- The amount of money you pay out each month is less than what you were paying.
- The interest rate overall is less than what you were paying, especially if most of the debt consolidated was high interest credit card debt.
However, there are also some negative effects of a consolidation loan. These are:
- The loan is generally amortized over a longer period of time. In the end the interest adds up.
- If you shopped around, your credit score could be lowered as each credit check negatively affects your score. This negative affect could also have increased your rate as you would be considered a higher risk.
There are many loan consolidation companies out there. Some are legitimate and others dubious. Some advertise on radio, TV and in banner ads all over the internet offering the “Lowest Interest Rates” and “Bad Credit Loans”. The idea is to reel you in the door and sell you a loan agreement. They have no interest in your situation or if a debt consolidation loan is the best solution for your financial troubles.
That is a major difference between a Licensed Insolvency Trustee and a debt consolidation company. The trustee is looking out for your best interests and is not paid based on your ability to get a loan. In fact they may be able to renegotiate your terms with creditors to a payment that is very affordable to you.
Licensed Trustees can also provide you with other options depending on your financial troubles. This could include consolidation loans, informal proposals, consumer proposals and personal bankruptcy options.
Your initial consultation is free and we have several offices across the GTA to serve you.
Consider talking to a licensed trustee for debt relief and advice on debt consolidation in Toronto and across the GTA.