Debt is part and parcel of being a consumer in St. John’s these days. It’s nearly impossible for anyone in St. John’s to be able to afford the cost of a home without the assistance of a mortgage, just as it’s very difficult to be able to cover the cost of a vehicle without a car loan. Some amount of debt is normal and even necessary.
In fact, a little bit of debt is actually a good thing for consumer credit in St. John’s. But when your debt load starts to grow and get out of control, consumers in St. John’s can find it challenging and even impossible to keep up with monthly debt payments. That’s when it might be time to get some help in the form of debt consolidation.
Read on to find out what debt consolidation is and if it may be something that can help you sort out your debt.
What is Debt Consolidation in St. John’s?
Having several loan and credit accounts to deal with at once can be overwhelming. And if many of them come with high-interest rates, they can be extremely difficult to pay down.
A debt consolidation program in St. John’s may be able to help in this situation. These programs may suggest a debt consolidation loan, which can help you pay off all of your high-interest debt by replaying them with one larger loan at a lower interest rate. You can effectively save a lot of money through debt consolidation while making it easier to manage just one loan rather than several.
Read this to learn more about the benefits of a debt consolidation program.
Why Do Consumers Get Into Debt in St. John’s?
There are all sorts of situations that can put a St. John’s consumer into out-of-control debt. While some situations may be tough to avoid when it comes to having debt – such as buying a house or a car or even taking out a student loan to pay for college tuition – there are other scenarios that can make debt issues much worse for consumers in St. John’s.
Here are some of the more common reasons why Canadians, including St. John’s consumers find themselves drowning in debt:
- Spending far beyond their means
- Spending up to the limit on credit cards
- Being late or missing loan payments
- Only making minimum payments every month
- Getting a pay cut
- Losing a job
- Dealing with car repairs and home repairs
- Suffering an injury or ailment
- Dealing with family emergencies
There are all sorts of situations that can place St. John’s consumers in mounting debt, some of which can be controlled and others that can’t. Regardless, debt problems in St. John’s may be alleviated with debt consolidation.
Want to learn how to create a debt repayment plan? Click here.
Does ‘Good Debt’ Really Exist?
When you think of the term “debt,” you likely think of financial trouble. But not all debt is necessarily bad debt. In fact, some debt is actually a good thing and can be helpful for your credit score and profile.
For example, having manageable debt that you make regular timely payments toward can help you establish good credit and show creditors and lenders in St. John’s that you are a responsible borrower. This, in turn, will help to strengthen your credit profile and make it easier for you to get approved for various loan products in St. John’s at lower interest rates.
Other types of debt – such as a mortgage – can also be a good thing because you can leverage the bank’s money to buy something of value that will appreciate over time. Besides, you need a roof over your head, so buying a home is typically a necessary type of debt to add to your books.
What Makes Debt Bad?
But, while this type of debt can be considered “good debt,” bad debt obviously also exists. Usually, bad debt can be considered anything that puts you in a position to be unable to make timely payments every month. If you struggle with making payments, your debt can’t be a good thing. Also, if you take out debt to buy things that you don’t need or that lose value the moment you buy them, this can also be considered bad debt.
You’d be well-advised to take out debt only when necessary and only when you have the financial means to make timely payments every billing cycle.
Look here for more comparisons between good debt and bad debt.
What’s the Difference Between a Debt Consolidation Loan and a Debt Consolidation Program?
A debt consolidation loan and a debt consolidation program are not exactly the same. With a program, you’ll work with a credit counsellor in St. John’s to create a debt repayment plan that works for both you and your creditors so everyone involved is happy. You’ll then make monthly payments to your credit counsellor who will distribute the money to the appropriate creditors per your plan.
With a debt consolidation loan, you’ll take out a larger loan, repay all your smaller eligible loans and then focus all your efforts on making payments toward your new loan.
Should You Apply For Debt Consolidation St. John’s?
Debt consolidation St. John’s can be a great way to get out of debt, but it’s not necessarily suited for everyone and every financial situation. That said, there are plenty of reasons why debt consolidation may be able to help you, including the following:
- Make managing debt simpler with one debt bill instead of several
- Save money by eliminating high-interest debt
- Learn how to budget more effectively with the money you make
- Reduce your debt load
- Give your credit score a boost
Looking to improve your credit score this year? Check this out.
Can All Debt Be Consolidated in St. John’s?
Debt consolidation is not applicable to every type of debt. More specifically, secured debt usually cannot be applied to a debt consolidation loan. Also, debt loads that are far too excessive may not be able to be alleviated with a debt consolidation program. In these situations, other debt management programs may be required.
The following types of debt may be consolidated in St. John’s:
- Credit card debt
- Unsecured personal loan debt
- Unpaid utility bill debt
- Unpaid cell phone debt
- Student loan debt (non-government)
- Medical bill debt
- Car repossession debt
Check out this infographic to learn about what affects your credit score.
Can Debt Consolidation Have a Negative Effect on Your Credit Score?
Having a high credit score is important for your financial profile and will make getting approved for a loan in St. John’s, at favourable terms, more likely. But what if you participate in a debt consolidation program or take out a debt consolidation loan? Will this negatively impact your credit score?
The answer to this question will depend on how you use your debt consolidation loan. For instance, if you use it to pay down high-interest debt, such as credit card bills, you can effectively reduce your overall credit utilization ratio. This, in turn, can give your credit score a boost. But if you use the loan for frivolous reasons and don’t make your payments on time, your credit score will probably suffer.
Click here to know if a debt consolidation loan will look bad on your credit report.
Need Help With Your Debt Load in St. John’s?
There are several programs available that can help you manage your debt load, and debt consolidation in St. John’s is one of them. If your situation seems like it would be appropriate for this type of program, let Loans Canada help put you in touch with the right source in St. John’s to finally help you reduce your debt load and get a better handle on your finances. Call us today.
