What Are the Benefits of Debt Consolidation?

The unfortunate reality is that a number of people struggle with getting their debts under control. Whether because of credit accumulation, student loans, vehicle financing, or a career setback, there are a number of reasons why someone from any economic or educational background could suffer from debt.

If you are one of these people stuck in a financial free fall, then it’s time to take a deep breath and consider your options – one of them being debt consolidation. Debt consolidation is when you combine multiple debts into one monthly payment. The benefits of debt consolidation are numerous – keep reading to find out why.

A Helping Hand

If you work with a certified Credit Counsellor when consolidating your debt, you’ll have someone to guide you along the process and take care of every detail. They will work with you to create a repayment program with a specific end date, as well as scheduled monthly payments. They’ll even round up your unsecured debt, negotiate with your creditors to lower the interest rates or drop them down to zero, and stop collection calls.

Payments can be made automatically via telephone banking, debit card, or money order, and includes full tracking. Once you send in your monthly payment, it gets distributed to each of your creditors. With the help of your Credit Counsellor, you can rest easy knowing that someone is on your side representing your best interests.

Build a Healthy Financial Future

Once you consolidate your debt and choose to work with a certified Credit Counsellor from a non-profit credit counselling agency, you’ll only have to deal with them directly and you won’t have to talk to a single creditor. But a Credit Counsellor won’t just manage your debts – they’ll also help you build a more secure financial future. They are financial experts and can teach you how to:

  • Track your spending and gain insights into spending habits, so you can determine where you should cut back.
  • Build a monthly budget that works for you and your goals. A budget will help you grow your savings as well as build an emergency fundso that you’re less likely to rely on credit cards in the future.
  • Set financial goals. Whether you want to move into a new home, help a child through school, or save for retirement, your Credit Counsellor can help set realistic goals and teach you how to achieve them.

Their goal is to make sure that when you do get out of debt you won’t fall right back into a bad situation – instead, you’ll come out on top with a sound financial management plan.

Bankruptcy Isn’t a Better Option

There’s a common misconception that filing for bankruptcy will bring you back to a “blank state” and clear up your finances. This isn’t really the case, though. Bankruptcy kills your credit, takes your non-exempt assets like RRSP contributions, and seizes any equity that you have – if you don’t have a home, it makes it more difficult to get a mortgage in the future. There are administrative fees and additional payments may be required based on your income.

At the end of the day, it’s just not worth it. Instead, choose to consolidate your debt and build a better future with the guidance of a certified Credit Counsellor.

4 Reasons you should avoid payday loans

When it comes to an urgent requirement of money, many people often rely on the payday loans, but friendlylender.ca suggests that it is not the very best option at hand. Yes, it is true that this type of loan can be a good option for people who can repay it within a short frame of time and has the capability to do so without much constraints but it isn’t for every single person on board.

If you have been looking forward to taking out a payday loan, know about these shortcomings first before you end up making a rash decision that can impact your financial stability in the end.

What are payday loans?

For those who aren’t aware, payday loans are the type of loans which can be sanctioned in a matter of hours with no possible cross checking for the credit balance and such. 

Why are they bad?

As we did mention before, payday loans aren’t the best option, here’s why.

Very high rates of interest

The very first and possibly the most important reason why this isn’t the best option is because of the kind of interests they charge. The same goes up to 36% of the sanctioned amount as well, which is nothing short of ridiculous when you do come to think of it. These kinds of payday loans are often offered by the local merchants and lenders around the localities or to the residents who don’t qualify for the standard requirements of the loan. It is best suggested that you thus keep an eye out on the rate of interest before you even think about delving into the same.

Repeat cycles are common

Given that the rate of interest is so high, many people often tend to find themselves stuck in a situation involving a repetitive cycle. What this means is the fact that many people often take up payday loans to just pay their pending payday loans. As crude as it sounds this is the reality and this is what happens for the most part. Given that these are often illegally bound, many people end up being in constant debt or face issues associated with the assets or the things that they kept at stake against the money they withdrew.

Constantly rising rates

If you are taking a loan of $100 and you have to pay around $30-$40 in just the rate of interest, do you even think that the same will end up doing any good to you? That is exactly what happens with the payday loans. Owing to the fact that the interests are so high, majority of the people often tend to find themselves in a situation where they are never able to dust off their debts and are constantly stuck in it for months or even for years at a stretch.

Not safe

Last but not the least is the fact that taking these loans aren’t safe for you or even for your family. For the most part, they are given by the local merchants who have people to hustle the money out of you if you fail to pay them on time. The added harassment is a completely different scenario. Additionally, many of these lenders tend to not do any kind of verification and even need access to your bank account which can prove risky in the future.

If you are on the lookout for immediate money, it is important that you opt for some other alternative that won’t end up questioning your safety and security. It is best that you either save up or take a loan from a credible source with the minimal rate of interest.

Debt Crisis Canada: All You Need to Know about Consumer Debts

Canada’s debt crisis is becoming a threat to the country’s economy. According to Canada Statistics, the debt-to-income ratio of most Canadians increased in the fourth quarter of 2018 after the debts slightly outpaced the growth in income. The looming household debts result from the unprecedented number of people who borrow more than what they earn.

In March 2019, the Bank for International Settlements’ (BIS) quarterly review stated that Canada’s risk to fall in a debt crisis dropped significantly over the previous year. However, out of 75% of Canadians are still living in debts, and 31% claim that they don’t have enough money to cater for their needs, putting the country at a higher risk of a debt crisis.

Why Many Canadians are in Debt

An average Canadian has a consumer debt of about $8,500, excluding mortgages. About 14% of Canadians have consumer debts between $10,000 and $25,000, while 14% have debts of more than $25,000. The credit card debts contribute the most significant percentage to household debts in Canada.

Now, let’s delve a bit deeper into some of the factors that contribute to high consumer debts in Canada.

 

  • High Living Costs

 

Most Canadians go into debts not because they are spendthrift, but to get money for their necessary living expenses. In 2017, Hoyes, Michalos & Associates Inc. issued a report explaining that most people with low incomes take out loans to cover living expenses.

 

  • Abusive Usage of Credit Cards

 

Considering how credit cards are easier to use than cash, most people end up misusing them, posing a huge risk to the Canadian economy. While credit cards make payments convenient, they can land users into financial trouble.

Most Canadians use credit cards to transact. In March 2019, the Bank of Canada issued a report stating that 89% of Canadians have at least one credit card. As most credit cards charge higher interest rates of up to 22% or more, it might be challenging to pay off the entire debt once you begin using the card.

 

  • Lower Income

 

Another reason why most Canadians struggle with multiple debts is because of lower incomes, especially if the expenses outpace income. As a result, they end up spending more than what they can afford. By doing so, the consumer debts my most likely increase.

 

  • High Income Tax

 

When it comes to public services, most Canadians spend more than half of their income on taxes imposed on the services. Average Canadians with middle incomes spend about 63% of their income on public services, leaving them with a little amount of money to save or spend on their daily expenses.

 

  • Income Inequality

 

According to Larry Brown, the president of the National Union of Public and General Employees (NUPGE), most Canadians struggle with debts because of income inequality. The latest report from the Canadian Broadcasting Corporation (CBC) states that about half of Canadian households are $200 or less far from insolvency.

How to Avoid Debt Traps

Multiple debts are unhealthy because they reduce savings, and can lower your credit score if not paid on time, tarnishing your financial reputation. In a nutshell, let’s take a look at some of the tips that can save you from getting into debt traps.

  • Spend money on what you can afford. Spending more than what you earn can land you into debt traps
  • Save at least 20% of your income for unexpected expenses or emergencies
  • Pay your bills on time to avoid late charges. That will not only save you from debts but also stabilize your credit score
  • Spend less than your credit limit to prevent high-interest charges

Final Words

Canada’s household debts have been growing over time, putting Canadians at financial risks. If you are struggling with multiple debts and you need to get out of debt traps, Loans Geeks can offer a great solution. Not to mention, the website has helped many Canadians to pay off their debts on time.

3 Strategies To Help You Pay Down Your Debts Faster

Almost everyone has some form of debt. Whether it’s debt from buying a home or car, student debt, or debt from spending too much on your credit cards, all of your debts are going to have to be paid back one way or another.

For most people, it’s the thought of having to pay off their debt that gives them some financial anxiety. But if you’re able to find a payoff plan that works for you, you should be able to pay down your debts faster than ever before.

To help you see how this can be done for yourself, here are three strategies to help you pay down your debts and avoid having to file for bankruptcy.

Change Your Spending Habits

If the debt you have accumulated is due to buying a modest home or car, then changing your spending habits likely isn’t the issue that got you into debt. But if your debt has grown because you’ve been living outside of your means in other ways, changing your spending habits is going to have to be the first thing you do if you want to get out from under your debt.

While changing your spending habits can be very challenging at first, especially if you’ve been building these habits over the course of years, David Weliver, a contributor to Money Under 30, shares that this is the only way you can ensure that all your hard work to pay off your debt will ever really make a difference in your overall debt ratio.

Pay As Much As You Can Toward Your Debt

Once you’re able to get your spending under control, your next hurdle is going to be knowing how to allocate your money toward your various debts. One strategy you might want to try, according to Allison Martin, a contributor to Money Talks News, is to simply put as much money as you can toward your debts.

As soon as you’ve paid off your bills, give every last penny to your debts. Any extra money you make should also go toward your debts. As long as you have some money saved in an emergency fund, you should be giving as much money to the paying off of your debts as you’re able so you can pay them off as quickly as you can.

Try The Debt Avalanche Method

Another strategy that can work for those trying to get out of debt fast is to use the Debt Avalanche Method. According to Sean Pyles, a contributor to NerdWallet, the Debt Avalanche Method means that you put all your extra money toward the debt with the highest interest rate. Once you pay that debt off, you then take the money you were paying on that highest interest rate debt and start adding that to the debt with the next highest interest rate.

By choosing to go with this strategy, you’ll be saving yourself a lot of money in the long run that you otherwise would have been paying toward interest on your debts.

If you’re wanting to find a way to help you pay off your debt fast, consider using the tips mentioned above to help you find the strategy that’s right for you.

Here’s What You Need to Know About Buying a Car in Canada

Just like in the U.S., Canadians have a few different options when buying a car. If you’re fortunate enough to have the cash, you can buy the car outright and not have to worry about making payments. However, most Canadians will have to borrow money from a bank or other lender to either finance or lease the vehicle.

It’s important to understand the benefits and drawbacks of each option before making a decision.

Car Loans – The Pros and Cons

Taking out an auto loan is one option when buying a car. There are two ways to get car loans in Canada:

Dealership Loan

Most dealerships in Canada can make loan arrangements through a lender. In most cases, you can apply for and receive a loan at the dealership to save time.

A car loan can be arranged through:

  • A bank, credit union or other financial institution
  • The financing division of the car manufacturer
  • An independent finance company, such as one that specializes in car loans

Bank, Credit or Online Loans

If you prefer, you can take out a loan or line of credit through your own financial institution, rather than through the dealership.

If you have a strong relationship with a bank or financial institution, you may be able to get a better interest rate than what you could get with a dealer.

It’s also possible to take out online personal loans in Canada, which allows you to compare rates and terms before settling on a loan option.

The Pros of Auto Loans

  • No restrictions – You can drive away with the vehicle that day, and there are no restrictions on how you use or customize the vehicle.
  • Ownership – You own the vehicle, and when the loan is paid up, the title will be transferred to your name.
  • No payoff penalties: You can pay the loan in full at any time without penalty.

The Cons of Financing

  • Commitment: Financing is a long-term commitment. Loans span several years.
  • Payments: Payments are typically higher with an auto loan compared to a lease.

Car Leases – The Pros and Cons

Leasing is similar to a rental. Leasing requires you to make regular payments for the use of the vehicle over a set period of time. Usually, leases last 3-5 years.

When the lease period is up, you will not own the vehicle. Some lease contracts will give the option of buying out the vehicle at the end of the term, but typically, this requires one large payment.

Leasing is often the preferred option when consumers want new cars more often and don’t want to be bothered with selling or trading in previously purchased cars.

The Pros of Leasing a Vehicle

  • New cars: You have the option to drive a new car every few years if you qualify for a lease.
  • Lower payments: Generally, lease payments are lower than auto loan payments.
  • Purchase: Most leases give the option of buying the car, returning it, or leasing a new one.

The Cons

  • No ownership: You won’t own the vehicle when leasing it – unless you choose to purchase it outright at the end of the lease term.
  • Additional fees: You may have to pay extra fees if the vehicle withstands excessive wear and tear.

It’s important to weigh the pros and cons of each option, leasing or financing, before making your final decision. Each offers its own benefits and drawbacks, but ultimately, it will come down to your personal budget and preferences. You may prefer to lease if you enjoy driving new vehicles every few years, but if ownership is your goal, financing may be your best bet.

5 Essential Tips For Getting Out From Under Debt

Finding yourself under a mountain of debt can destroy your entire life.  Too many financial obligations on your shoulders can make it impossible to catch up with.  The more you try to pay off your debts the more that seem to add up.

However, by learning the right tips, you can take control of your debt.  Yes, even with student loans, mortgages, and maxed out credit cards.

Here are some of the best tips to get you started on your way to paying it all off.

Get Organized

The first step to tackling your debt is to add up everything that you owe.  Create a list of all of your monthly payments and the interest rate. Once you have an idea of the total amount of debt that you’re looking at, you can start to formulate a plan.

Sell What You Don’t Need

When you’re in overwhelming debt, your biggest priority should be paying it off.  Therefore, you should try to come up with as much money as possible.

You may find yourself coming up with excuses because you don’t want to part with your precious belongings. However, desperate times call for desperate measures.

Consider selling your car and taking public transportation until your debt is paid off.  Sell your computer and use one at the library. If you’re truly committed, you’d be surprised with all of the creative ways you can come up with money fast.

With the money that you make from selling things you don’t need, you can put it towards a large one-time startup payment towards your debt.

Stop Using Your Cards

A lot of people want to get out of debt, but they can’t seem to stop using their cards.  The more you spend, the more your interest climbs.

Get rid of your cards and put them where you can’t access them.  The only way that you’re going to make it out of debt is if you’re paying them off rather than owning more.  It’s that simple!

Use The Snowball Method

Experts recommend using the snowball method to pay off your debt.  You start with paying off your smallest debt.  Once that’s paid off, you use the payment you were previously paying towards that debt, towards your next biggest debt.  Once that debt is paid off you pay the next debt using the same method, until you’re finally out of debt.

Live Modestly

Take a look at your expenses every month and be honest with yourself.  Ask yourself whether your money is going towards things that you actually need or not.

Eliminate all of the charges that you can live without.  If you truly want to escape debt, then you’ll have to live modestly for a while, putting your desires on the back burner.  Once your debt is paid off, you’ll be financially free!

All you need to know about getting a loan in Canada

Financial support can be something you require in various scenarios, for either personal or professional reasons. Once you find yourself in the situation of needing money for a said purpose, you might concern yourself on whether you are viable for a loan or what needs to be done in order to access exactly the monetary advantages you are targeting. As a Canadian citizen, you’ll discover that in the loan department there is a wide range of appealing opportunities available for those who pursue the right steps and are actually aware of the lending possibilities in the country. Because this may be the first time you actually find yourself in the position of needing monetary support, acquiring some insights on the topic might be useful. Here’s everything you need to know, in general, about getting a loan in Canada:

 

Assess your needs

First comes first – analyse your situation with care and think about your specific needs and requirements. It’s important to have a clear idea in mind on how much money you would need for the intended purpose, so you don’t end up applying for a loan that fails to cover all your future necessities. Do the math, figure out what amount you would manage to make use of, and only when you have a figure in mind, you can start searching for available opportunities. Also, is highly relevant to make a plan on how you would manage monthly payment after receiving financing. Before you decide to request funding, having a proper plan on repayment is essential, so spend some time thinking about this particular detail as well.

Select a loan type

Depending on what you will be using the money for, you can decide on a particular type of loan. In Canada, you have an extensive array of options, so coming across one that ticks off all the boxes will not be difficult. The range varies from personal and payday loans to business, mortgages and even farming and agriculture loans. Once you have already assessed your needs, establishing into which category you fit won’t be difficult at all. The maximum amount access will naturally be higher for business funding, for example, than it would be for just a regular auto financing.

Use the right tools and resources to your advantage – Canada loan directories

With your requirements set straight and the type of loan already chosen, the most difficult part of the process comes and that is actually deciding on a lender. Once you get into the subject, you’ll discover just how many financing companies are on the market, which might seem promising considering it increases your odds of actually having your application approved, but it can also be challenging to decide on the most suitable fit. To manage dealing solely with reputable, top quality lenders and not collaborate with a company that will cause you problems or include hidden clauses in the contract, resort to the right lender comparison tool. Nowadays, you have digital tools – online platforms – that give you the opportunity to effectively compare lenders and what they have to offer. Seek a site of this sort and discover which company would provide you with the most appealing financial product.  It doesn’t matter if you are interested in personal loans in Canada or you are seeking business funding, a proper platform makes pre-application and company selection easy and convenient. Al the work will be basically done for you, you’ll just need to see which lenders meet your criteria and come with the most benefits in your situation. Loan directories have revolutionized how consumers are accessing financial assistance in various situations.

Getting your documents in order

Once you have managed to decide on a company that you think would offer you the most appealing advantages, you’ll need to find out what documents and paperwork are required from your part. Perhaps you have bad credit, and you are demanded to provide more extensive documentation, or the type of loan you want to access comes with increased requirements – contact the lender, discover what your file should contain and get your document in order.

Apply

Once you have become familiarized with the subject, have understood what loans are available in Canada, which ones suit your case best and have gathered all the required paperwork and documents you can move on to the final step and that is actually applying to the lender of your choice. Considering the way things have evolved in this department along the years, nowadays, you can even send in your loan application online through the right online platform. You are just a few clicks away from your much needed financial support. The response duration on your sent application could however vary, depending on the how complex that particular type of loan actually is, so while for small, personal loans you may get your money rapidly, for business financing, for example, it might take a bit more time – usually, the higher the amount, the lengthier the entire process.

Getting the financial support you need to meet some of your objectives might seem difficult at first, without you having that much knowledge on the subject, but once you look into the matter and find out what the necessary steps to take are, you’ll discover that the funding you require might be easier to obtain than imagined. Doing your research is the most important part of any loan application, so this is the starting point you’ll need to focus on. Once you know with exactitude what you need and what different lenders have available for you, proceeding with your application will not take you long. Lenders in Canada offer people the financial support they require through different opportunities, so whether you need a personal loan to cover some of your life expenses or you require funding to pursue the goals of your business plan, you can get your hands on proper means of financing fast and easy is you know what needs to be done in this direction.

6 Actions to Take to Save $1000 on Your Student Debts

Completing your college education can make you feel excited and liberated. However, this also means that you have to start repaying your student loan. This is a huge responsibility.

If you can plan early enough, you can not only save a lot of money on your student loans but you can make the transition with minimum stress. Here, you will find some actionable tips that can help you save money on your student loans.

Take advantage of the grace period

After you’ve just graduated, you have about six months before you are required to start repaying your student debt. While you may think that this is a good deal, the loan will become more expensive if the period elapses before you have cleared the loan. if you took a loan with government subsidies, you have the opportunity of paying the principal amount without interests as long as you pay within the grace period.

On the other hand, unsubsidized loans accrue interests from the instant you get the money. Although the lender doesn’t require you to make the payments immediately, the interests keep on growing. As such, you may want to repay the interests during the grace period. This lowers the amount you owe since your progressive payments will go towards settling the principal amount.

Consider an income-based repayment program

If you are facing genuine hardships with making the required payments on your student loan, an income-based repayment plan can help you out. Generally, these plans will limit your payments to only 15% of your annual income and at the same time, your term will be adjusted to 25 years. After you make payments for this period, any amount that is outstanding will be canceled.

However, this method is only appropriate for people who can’t afford the monthly payments. This is because you might end up paying a lot of money in interests, but it lower than you would have paid if you defaulted the loan.    

Besides the forgiveness that comes after 25 years, you can still benefit from other programs that cancel your loan sooner. One such program is the Public Service Loan Forgiveness and it grants forgiveness to people working in government agencies and non-profit organizations. However, you must have worked with them for at least 10 years. In addition, there are programs that benefit lawyers, doctors, and teachers.  

Set up automatic payments and surpass the minimum requirement

By signing up for automated payments, your creditor can offer you a discount on the interest you are supposed to pay. While the figure may appear small, it can translate into huge savings after several years. Besides, you won’t have to face the stresses of late payments.

If you can afford to pay more, do it. While this may take more of your available resources, you can save a lot of money in interests since the debt will be cleared sooner. To illustrate, if your loan stands at $50,000 and the interest rate is 6%, making at least $100 extra payments per month can save you more than $3,000. In addition, you’ll clear the entire amount two years earlier than scheduled. With most student loan providers, you will not be charged prepayment penalties so there are no additional costs.

Student loan consolidation

Student debt consolidation has gained popularity with graduates who have more than one loan. Basically, this option takes all your outstanding debts and they are combined into one. Instead of dealing with multiple loans which come with different interest rates, you’ll have a single loan with a defined interest rate. While the loan amount will appear higher, you will end up saving several thousand on your student debt in the long-haul.

However, this method is most beneficial to people with a good income and outstanding credit history. For instance, if your total student debt stands at $200,000 with an interest rate of 7%, its possible to refinance the loan at 4%. But this is only possible if your credit scores are high. You should also understand that by using this option, you will no longer be eligible for IDR options as well as loan forgiveness.

Find a creditworthy cosigner

When you apply for a student loan with a creditworthy cosigner, you are setting yourself up for easy approval and you also benefit from lower interest rates. Basically, most lenders will determine the interest rates for realistic loans based on the credit scores.

However, you should bear in mind that your cosigner is viewed as a co-borrower and they bear an obligation to settle the outstanding debt. At the same time, all the defaults and delinquencies will be reflected on the credit report of all parties. However, there are lenders who can offer cosigner release after making about 48 payments on schedule.  

Use extra income to pay the loan

If you want to eliminate the debt earlier, you can make additional payments using any extra income that comes your way. The idea here is to minimize the interest you will be paying by the end of the repayment cycle. However, this option will be more suitable for people earning a high income since they have more money to meet other financial responsibilities.

On the other hand, this option also means you will forgo the option of getting loan forgiveness since you will have eliminated the debt before you can qualify for the program. As such, if you are certain that you don’t have to pay the entire amount; this might derail your plan.

While student loans may seem like a heavy burden, you can eliminate the debt and save some thousands in the process. It is not only important to start making the payments early but it is also crucial that you remain diligent on your payments. While there are numerous ways to help you save on your student loan, you need to stay focused on eliminating the debt. By using the tips in this article, you can increase your chances of becoming debt free and embark on other goals that contribute to financial freedom.  

4 Alternative Financing Options for Small Businesses

Traditional financing is hard to come by when you run a small business. Banks often require an excellent credit history and at least two years in business. According to a report from Biz2Credit, less than 25% of small business loan requests were approved by big banks in March 2016.

Alternative forms of financing can help small businesses obtain the funds they need to grow and thrive. Here are four alternative financing options for small businesses.

1. P2P Loans

Peer-to-peer lending allows businesses to borrow money from their peers rather than a single lender. A banking platform may approve the loan to go live for bidding, but the funds will come from ordinary people who want to make an investment in your business.

To start the process, businesses must fill out an application. The platform then assesses the business’ credit risk and applies an interest rate to the profile. Investors can then view the profile of the borrower and determine whether they want to invest. Businesses with good credit generally have better luck with P2P loans.

P2P lending rules vary from state to state. The practice is legal in all U.S. states aside from Ohio.

2. Crowdfunding

Similar to P2P lending, crowdfunding allows businesses to raise money from their peers. There are four types of crowdfunding: rewards, debt, charity and equity. Platforms like Kickstarter and Indiegogo generally use rewards crowdfunding, while GoFundMe is more focused on charity.

With rewards crowdfunding, the business doesn’t have to pay the money back. Backers are sent something in return for their donation. With equity crowdfunding, those who invest in the business receive a share of the business or product.

Crowdfunding is often used by startups looking to launch a new product or service, small businesses looking to expand and creative professionals looking for funding for a project.

There may be fees associated with the crowdfunding platform.

3. Lines of Credit

A business line of credit can be obtained from a bank or an online lender. Unlike a conventional loan, a line of credit gives you access to a sum of money that you can draw from at any time. Businesses are only charged interest on the amount of money that is withdrawn.

Lines of credit work similarly to a credit card.

If your business is in need of working capital or extra funding to cover expenses during a slow season, a line of credit may be a good option.

4. Invoice Factoring

Invoice factoring is different from other forms of lending. Invoice factoring companies purchase your business’ unpaid invoices at a discount and you receive the majority of the money upfront. The client pays the invoice, and the factoring company sends you a second installment (less the factoring fee).

The factoring fee is a percentage of the total amount of invoices that are being factored. Typically, the factoring fee for 30 days ranges from 1.5% to 4.5%.

Invoice factoring is appropriate for businesses that have unpaid invoices. Bad credit isn’t normally an issue with this form of lending, as the factoring company is more concerned with the client’s ability to pay – not yours.

 

 

 

 

4 Things to Think Through Before Consolidating Your Debts

Debt consolidation can be a Godsend, especially when you are drowning in debts. Once you consolidate your credit cards, your line of credit, and any other loans that you may have, into a lump sum, there will only be one affordable payment that you may have to make each month and at a low interest rate.

However, it’s imperative to understand exactly what you’re getting into, before signing on the dotted line and consolidating your debt. So here are a few things for you to keep in mind before you seal the deal with your debt consolidator:

Check if you are actually benefitting by consolidating your debts

Go for debt consolidation only if there is an actual benefit. You may have to do your math to find this out. But it is quite simple. Just add up all the payments that you are making currently towards your credit cards and loans. Find out how much you will have to pay if you consolidate them all. Now analyze the difference between these amounts. Here’s a debt calculator tool to help you do the math. If the margin is high and if you are saving a significant amount by consolidating your debt, it makes sense to go this route.

See if you can reduce your expenses

Too much debt can be a result of excessive spending. Get an account of your expenses by creating a budget analysis and you can then find easy ways to cut some of these expenses out of your life. Although you may not be able to do much about your fixed and required expenses, like your electric bill and mortgage payment, you can reduce overspending on entertainment related expenses. See if you need to do away with any of your old habits. Differentiate things based on your needs and wants. If you are serious about repaying your debts, you must make sure you won’t go back to your spending. This is when debt consolidation might work for you.

Research your options

You can choose from different ways to consolidate your debts. There are secured loans and unsecured loans. You can pool your debt on a balance transfer credit card or you can just transfer your outstanding debt onto a new line of credit. Some of this may involve high upfront costs or origination fees.

Apart from debt consolidation there are also other debt relief methods you can choose from. For instance there is debt settlement where you get to settle your debt for less than what you actually owe. You may want to consider the benefits and drawbacks of your options before making your decision.

At Golden Financial Services, their California Debt Relief office does a great job at explaining each debt relief option and showing you the benefits and downsides associated with each plan.

Try negotiating with your creditors

If you are going through a tough financial situation you can approach your creditors to make things easier for you to repay your loan. In case you have established good relationships with them they may even agree to reduce the interest rate or increase the term of your loan, thereby reducing your monthly payment. If this doesn’t work out, you may even ask them to suspend your payments for a few months until your situation improves. Here are step by step instructions on how to negotiate with your creditors on your own and get them to reduce the interest rate and monthly payments.

If debt consolidation is the path you choose, make sure that you only consolidate the debts that have a high interest rate. You can always pay off the low-interest debts on your own. And always check whatever company you’re working with, at the Better Business Bureau, on Yelp or TrustedCompanyReviews.com.