There are many finance organizations and other loan companies that make a lot of money from "selling" debt consolidation loans which is a process of refinancing loans and other debt that you may have.
These finance companies will often "sell" their loans on the basis that your weekly repayments are less, but don't always tell you that they will extend the loan term, they do not tell you about the higher interest rates or the additional fees that you will be charged. You can also get the best credit & debt counselling in Toronto.
Image Source: Google
People want to consolidate their debts to help their financial situation and allow them to manage their money better; however, you also should ensure that you are not just extending the loan term with higher interest rates and more fees just to reduce the weekly repayments.
The Right Reasons To Consolidate Debt
It is easy to get weighed down with debt and being mortgage brokers we do see a lot of people that are struggling to meet all of their loan payments. People may say that you should never have taken on so much short-term debt, but there are many situations where it has happened and it is no point dwelling too much on the past anyway.
The first thing that a mortgage broker should do is get a statement of position from you so they can establish exactly what debts you have. Only then they should assess which debts should be consolidated.
You should refinance IRD debt where possible as the interest and penalties can be extremely tough, but why would you refinance an interest-free loan?
There are times when you may refinance an interest-free loan; however, you would need to consider this carefully in the overall debt restructure to ensure that it is the best thing to do – normally it wouldn't be.