How 4 Pillars’ Debt Consolidation Can Help You Pay Off Your Debts

Saving up for a major purchase may take some time, especially if you are earning just enough. If your expenses are urgent, you cannot rely solely on your small income and premature savings to cover them. For many, the best and only option is to borrow money from a bank or a financial institution.

Unfortunately, taking out a loan has become quite a normal practice, so much so that people do it even for small and often unnecessary expenses. They feel secure knowing that there are immediate fund sources they can depend on. It’s this need that has led to the creation of many different types of loans available today. Debt relief consultants from 4 Pillars in Victoria, Nanaimo, Port Alberni, and Courtenay can shed light on the matter.

Secured and Unsecured

Secured loans are loans that are connected to a certain collateral, which is normally a valuable piece of property. If unpaid, the creditor can take the collateral to recover the money you owe. Unsecured loans, on the other hand, are loans that are not protected by a collateral, simply because they are neither too big nor too valuable or because you, the debtor, has an outstanding level of creditworthiness. 

Unsecured Loans and the Problem They Can Create

There’s a vast array of unsecured loans that you can take out to pay for certain small to medium-sized expenses. These include credit cards, payday loans, cash advances, and student loans. Because they are much easier to take out than secured loans, a lot of people are tempted to apply for more than one. Before they know it, they are already deep in debt and no longer capable of making payments.

Fortunately, banks and financial institutions offer various solutions to help deal with accumulating debt. The most attractive of these debt relief options is debt consolidation. This option allows you to combine your loans into one.

Technically, of course, it’s not possible to combine your loans because each one may have come from a different provider and with a different set of terms and interest rates. What happens in debt consolidation instead is that you take out a single loan to pay off the rest of your loans. 

Benefits of Debt Consolidation

 

There are a number of benefits to consolidating all your loans. Because you are no longer paying different sources and observing different terms, it will require you shorter time and less effort to make payments, which eventually reduces the chance of making mistakes. The interest on the new loan is also likely to be smaller than all the interest rates of your previous loans combined, so you can save, sometimes a lot. Your credit score is likely to improve as well because credit unions now see just one debt being paid regularly as opposed to several debts in which you are making late payments for one or two.

To fully understand how debt consolidation works, turn to a professional debt relief company, such as 4 Pillars. They have the answers to all your questions about debt consolidation. Financial consultants can even help you determine if debt consolidation is really the perfect debt relief solution for your unique financial situation.