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Debt Consolidation Vancouver 2019

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While there are many expensive places you can live in Canada, few are more expensive than Vancouver. Living in these places often requires consumers to take out multiple types of loans to pay for a variety of expenses like vehicles, emergencies, travel, repairs, etc.  

While many people can handle multiple types of debt and payments each month, others find it very difficult to handle this type of financial stress. If you find yourself under a mountain of debt month to month, and can’t handle it anymore, you may want to consider debt consolidation as a debt relief option.

The True Cost of BorrowingCheck out this infographic to learn about the true cost of borrowing.

The Two Types of Debt Consolidation

If you decide that debt consolidation is something you want to consider, you’ll have a second decision to make. There are actually two different types of debt consolidation, a debt consolidation loan and a debt consolidation program. We’ll take a look at each of them to help you decide which might be right for you.

Debt Consolidation Loan

A debt consolidation loan is a loan that people apply for in order to make their monthly debt payments simpler and easier to handle. If you have to make several different debt payments to different lenders each month, it can be a lot to handle. A debt consolidation loan is essentially getting one large loan to pay off your smaller debts and then making one large payment each month, instead of several smaller ones.

In addition to making your monthly payments much simpler, a debt consolidation loan is also a great way to secure better terms and a lower interest rate, which could save you a lot of money in the long run.

Wondering how lenders arrive at their interest rates? Find out here.  

Debt Consolidation Program

If you feel as though a debt consolidation loan isn’t right for you or you’re unable to get approved for one, you can always opt for a debt consolidation program. In a debt consolidation program, you don’t borrow any additional money, like in the debt consolidation loan. Instead, you will pay your debt relief provider one large payment each month, and they will distribute it to the appropriate creditors.

This program often results in your monthly debt responsibilities being lower than they were before. It’s also important to keep in mind that enrolling in this program could potentially hurt your credit and make it hard to secure new credit during the program and for a while after.

Read this to discover some of the benefits of a debt consolidation program.

As you can see, each has their benefits and drawbacks, so be sure to speak to an expert to help you decide which might be a better option for you before choosing one or the other. Regardless of which you end up using, the main goal of each is to help you make your monthly debt responsibilities a lot easier to handle and deal with.

Bad Debt vs. Good Debt in Vancouver

While most of us will have some sort of debt at some point in our lives, there is a difference between good debt and bad debt. Being unsure of the difference between good and bad debt can be harmful to your finances. In an effort to help consumers better understand the type of debt they have, here is the difference between good and bad debt.

Good Debt

Good debt is any kind of debt that helps you grow a type of asset, whether physical or theoretical. This asset could be anything from a home to a business or even your education. As a result, examples of good debt are things like mortgages, student loans, business loans, and investments.

Interested in asset-based leasing and financing? Check this out.  

Bad Debt

Bad debt, on the other hand, is debt that doesn’t help you grow an asset or increase your potential. Examples of this debt are things like consumer credit card debt and often the debt that comes with a car loan. They are sometimes necessary but aren’t helping us move forward at all.

Of course, these categories aren’t set in stone, and there are some examples where a type of debt that is usually good debt is actually bad debt. A solid example of this is when someone gets a mortgage that is simply too expensive and they become house poor.

What Debt Can Be Consolidated and What Cannot?

While debt consolidation is a great solution for some, it isn’t always the best for others. This is because not all types of debt can actually be consolidated. If you are going to opt for a debt consolidation, you need to be aware of what can be consolidated and what cannot. Here is a list of a few of the debts that can be consolidated and a few that cannot.

Debt That Can Be Consolidated

Debt That Cannot Be Consolidated

  • Mortgage
  • Home loan
  • Auto loans
  • Secured loans
  • RV or boat loans
  • Government loans
  • Lawsuits

Of course, if there is ever any confusion about whether a certain debt can be consolidated or not, be sure to speak with your debt relief expert or a credit counsellor.

Want to learn about credit counselling in Vancouver? Take a look at this.

The Right Debt Consolidation For You

Whether you want to enroll in a debt consolidation program in Vancouver or take out a debt consolidation loan, here at Loans Canada we are confident that we can help you achieve your goals.

FAQs

Will seeing a credit counsellor affect my credit score?

  • Meeting with a credit counsellor to discuss your credit building or debt relief options will not affect your credit score. But, if you enter into a certain type of debt relief program through your counsellor, that could have negative effect on your credit score.

What is the difference between unsecured and secured debt?

  • Secured debt is backed by collateral in the form of an asset, typically a vehicle or house. Collateral lessens the risk for the lender and sometimes allows a borrower to gain access to a larger loan or a lower interest rate. In the event that a borrower defaults on a secured loan, the lender has the right to seize the assets to recoup any losses. Unsecured debt, on the other hand, does not require any form of collateral or security.

What is insolvency?

  • Insolvency is the state of being unable to repay your debt. A borrower who is insolvent typically must seek professional help to deal with their debt issues.

Does the Canadian Government offer debt relief services?

  • The government of Canada does not offer any specific debt relief programs or products.

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Posted by
After dipping his toes into freelance writing while still enrolled in school, Kale decided to pursue freelance writing as his career after earning his Bachelors degree from the University of Regina. In his six-year career as a professional writer, Kale has focused on writing about finance, technology, cryptocurrency, entertainment, and sports. Kale work has been published on Yahoo, RentHop, the Regina Leader-Post, and ReboundFinance.com. Kale loves to create a wide variety of personal financ...

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