Debt Consolidation Loan
Canada consolidation loans are used to combine multiple debts into a single debt with a single monthly repayment. If you owe $15,000 to three different unsecured creditors like your credit card company or an installment loan, you go to your bank or another lending institution and borrow $15,000 and pay off the three existing accounts.
Do You Qualify?
To qualify for a debt consolidation loan you need good credit, and an asset worth at least as much as the loan. In our example, if you have $15,000 or more in equity in your home or car, you use that equity to guarantee the loan. If you have excellent credit, you may get a signature only loan on smaller amounts. All that means is the loan is guaranteed only by your signature. Signature only loans are rare and often come at a higher interest rate.
Canada consolidation loans seem like a great way to deal with mounting debt, but many times you may be back in deep financial trouble a few years after taking out the loan.
Here are some tips for helping you make sure a debt consolidation loan works for you instead of against you:
- Don’t wait to investigate a consolidation loan.
- Calculate the total repayment cost of the consolidation loan against the cost of your existing credit accounts.
- Educate yourself about proper use of credit.
- Cut up excess credit cards and limit yourself to one card.
- Prepare a personal budget and stick to it.
Debt Consolidation FAQs
- Consumer Debt Consolidation
- Student Debt Loan Consolidation
- How to Apply for a Debt Consolidation
- Debt Relief Scams
- Other Debt Consolidation Articles
Other Debt Consolidation Resources
- Office of Consumer Affairs Debt Consolidation Information
- RBC Royal Bank Debt Consolidation Info
- Office of Consumer Affairs
- CIBC Debt Consolidation Calculator