Renfi Capital is a lender that specializes in home renovation loans. It is the fastest mortgage lender in Ontario. They offer loans ranging from $25,000 to $150,000, with interest only payments at the low rate of 1% per month. Renfi works with a much wider range of credit types than conventional lenders.
Their platform is entirely online, making it easy, fast and secure.
- $25,000 - $150,000 loans
- Low credit scores accepted
- Low rate of 1% a month
- Open loan
Apply in 3 minutes, fully online process
15 minute approval, 72 hour funding
256 bit, end to end encryption
When living in Mississauga or any other urban area, you’re bound to accumulate some consumer debt. In fact, it’s a necessary part of most people’s living situations and can even be good for your financial profile in many ways. That said, debt can also be extremely tedious to deal with when it gets out of hand.
If you’re dealing with unmanageable consumer debt, filing a consumer proposal in Mississauga could be the option you’ve been looking for.
What happens to your debt when you file a consumer proposal? Find out here.
Common Sources of Consumer Debt
Before we discuss debt consolidation in Mississauga, it’s important to know where consumer debt comes from and how it can become unmanageable. With a bit of extra information, maybe you can avoid your financial problems altogether.
Generally speaking, consumer debt is the kind that you rack up within your everyday life. This could relate to your credit card bills, your living expenses, or even debts that occur due to unforeseen situations.
- Consumer goods (food, clothes, etc.)
- Household costs (rent/mortgage, utilities, etc.)
- Vehicle costs (repairs, fuel, etc.)
- Educational costs (tuition, books, etc.)
- Emergencies (floods, medical issues, etc.)
- Reduced hours/wage or unemployment
No matter where your debt happens comes from, too much of it can easily make you lose track of your bills and default on your payments. Which can lead to penalty charges, high-interest rates, and bad credit. The more debt you accumulate and the longer it remains unpaid, the worse the situation can get.
In the worst cases, consumer debt can result in your accounts being frozen (click here for more information about frozen bank accounts), followed by wage garnishment and other debt collection procedures. If you have enough debt, you may even be forced to declare bankruptcy, wherein your assets might be seized as compensation.
All this to say, that while some consumer debt is necessary, it’s essential to keep it in check. If you cannot manage your debt properly, it’s best to get ahead of them as fast as possible, which is where debt consolidation can come into play.
How Debt Consolidation Works
Consolidation is the act of reducing multiple debts at once, which you can do using two techniques. Though different in certain respects, both techniques have the same goal; to leave you with one recurring payment to keep track of, rather than several.
Debt Consolidation Loan
If you’re a responsible borrower, you can apply for a debt consolidation loan. Like most credit products, you would submit an application for a specific amount of money to a lender, such as a bank or an alternative source of credit. If you qualify, a lump sum will be deposited directly into your bank account.
Benefits and Drawbacks
You can then use the loan to pay down your debts, leaving you with a series of monthly installments to complete over several months or years. Some lenders will also allow you to pay off your loan quicker through larger or accelerated installments.
Finding a debt consolidation loan with a lower interest rate than the ones you are currently paying, should be the main goal. This is one of the benefits of a debt consolidation loan as a lower interest rate will allow you to save money and put it toward paying off your loan.
However, it may not be the right choice if you have bad credit as these are all factors that can get your application denied, especially with a prime lender like a bank (for more information about debt consolidation rejection, click here). While consolidation loans are also offered by subprime lenders, they will often be smaller and more expensive.
Even if you do get approved, a debt consolidation loan is also hefty financial responsibility that can result in further debt problems if not handled responsibly. Before you apply, ask your lender how expensive the loan would be overall and make sure you can comfortably afford it.
Debt Consolidation Program
If you have trouble qualifying for or don’t want a debt consolidation loan, the other option would be to enter a debt consolidation program with the help of a credit counselling agency.
Essentially, you would need to attend a number of credit counselling sessions, during which a credit counsellor will contact your lenders for you. Based on an examination of your finances, the counsellor would then attempt to negotiate a deal which, if accepted, would also allow you to repay your debt on a monthly basis.
Benefits and Drawbacks
Since you won’t have to qualify for any credit products, a debt consolidation program is often a better choice if you have low financial health, bad credit, or you’d simply like a professional to guide you through the process. A good credit counsellor may even be able to get your debt amount reduced. On top of that, there are many non-profit agencies that will help you free-of-charge.
However, many counsellors and agencies will ask a service fee once the process has been completed. Once again, your financial problems will only get worse if you can’t afford this fee, coupled with your monthly payments. Plus, a debt consolidation program is not legally binding, so your lender(s) are not obliged to accept it, which may further limit your options.
You should also be aware that there are many predatory agencies and scam artists who may use your desperation to charge you unreasonably high fees or steal your identity to commit fraud. Never give any of your personal or financial information without researching your credit counselling source properly.
Eligible Debt Types
Whether or not you qualify for debt consolidation in Mississauga will depend largely on the type of debt you have. Normally, most debt consolidations can only include unsecured debt, as well as some forms of non-credit debt.
Secured debt, on the other hand, cannot qualify because it involves collateral, which your lender still holds temporary ownership over. Some debts pertaining to legal or government entities must also be excluded.
Eligible debts include but aren’t limited to:
- Credit cards
- Personal loans and lines of credit
- Non-federal student loans
- Non-credit bills (utilities, internet, etc.)
- Unpaid taxes
Ineligible debts include but aren’t limited to:
- Vehicle loans
- Home equity products
- Federal student loans
- Legal fines (tickets, lawsuits, etc.)
How Debt Consolidation In Mississauga Affects Your Credit
It’s also important to be aware of the impact that the debt consolidation process will have on your credit, which can be a benefit, as well as a drawback. That’s because both debt consolidation loans and programs will be reported to Canada’s credit bureaus (Equifax and TransUnion) and show up on your credit report.
Debt Consolidation Loan
A debt consolidation loan, being a credit product, will have its own account and remain listed in your credit history for several years. During that time, your payment activity will cause your credit score to fluctuate. If you pay on time and in full, your credit utilization ratio will improve, so your score will increase. If you default, the opposite will occur.
Debt Consolidation Program
A debt consolidation program will have a similar effect throughout your payment plan. In addition, any of your credit accounts associated with the process will receive the third worst credit rating of R7. If you complete the program as agreed, your lenders will report that the debt is paid and the situation will gradually reverse itself, and vice versa.
The Overall Impact
Unfortunately, if you’re involved in debt consolidation in Mississauga, potential lenders may become skeptical of your financial ability when you apply for new credit. So, throughout the process, you may have to get by without using any credit products (besides your loan).
In fact, every time you apply for new credit, your lender can check your credit report, resulting in a hard inquiry. Hard inquiries also cause your credit score to dip, so it’s best not to apply multiple times within the same year, especially if you’re being denied every time.
Good Debt vs. Bad Debt
In the end, it may still be possible to avoid debt consolidation in Mississauga by simply knowing how to distinguish between good debt and bad debt. That’s right, almost any debt can be both good and bad for your financial profile under the right or wrong circumstances.
Let’s say you apply for a vehicle loan to purchase a new car, truck, or van. That loan is meant specifically so you can finance said vehicle through installments, making it more affordable over time. After all, new cars can cost tens of thousands of dollars, which most drivers can’t shill out in cash.
In turn, you’ll be able to drive the car of your choice and make your living situation more convenient. You’ll have an easier time getting to work, school, or cross-country. Not to mention that, like all credit products, any vehicle loan payments you complete will go a long way toward building and improving your credit.
For a more detailed look at good debt and bad debt, click here.
Nevertheless, that same vehicle loan can damage your finances severely if you can’t afford all the different costs involved. Not only will defaulting on your payments lead to penalty charges and reduced credit health, but your savings could also be drained quickly trying to deal with the situation.
Then you have gas, insurance, repairs, and maintenance to think about, all of which are worse when you’re financing an unaffordable vehicle, such as a luxury model. Any of these issues can result in a massive amount of debt and even end with your vehicle being repossessed. Following that, debt consolidation may be your best option.
Debt Consolidation in Mississauga
If you’re looking to apply for a debt consolidation loan or enter a debt consolidation program, rest assured that Loans Canada can help you find a solution. All you have to do is contact us or check out our website today!