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Best Debt Consolidation Services

The best debt consolidation services can turn uncontrollable liabilities into easy-to-manage expenses. It may be tough to select one with so many service providers to pick from. By doing your research, you can easily decide.

Looking for the best debt consolidation services in Canada? Learn how to consolidate your debt effectively with the best service providers.

Consolidated Credit and Loans Canada provides some of the best debt consolidation services. They point you in the right direction when you decide to consolidate your debt. Knowing what you’re setting yourself up for with debt consolidation is essential.

This is not a solution fit for everyone. Therefore, look into whether it’s right for you. Also, consider the pros and cons.

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Debt consolidation is one option available to Canadians to reduce financial stress. According to the CIBC Financial Priority poll results, that is the definition of financial wellness for most Canadians.

In this article, you’ll learn everything you need to know about consolidating debt, including the best debt consolidation services.

Best Debt Consolidation Services

Not all companies that provide debt consolidation solutions provide comparable equal quality services. Therefore, when looking for the best debt consolidation services, you must assess all your options. The following are some companies that can help you consolidate your debts:

  • Consolidated Credit
  • Debt.ca
  • Loans Canada
  • Total Debt Freedom
  • Consolidated Credit Canada

Each company that offers the best debt consolidation services is briefly described below.

Consolidated Credit

  • More than 500,000 Canadians helped in 10 years
  • Almost $500 million in debt eliminated
  • 300+ hrs. of education offered each year
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Consolidated Credit

Consolidated Credit provides some of the best debt consolidation services and counseling for debt relief. Their credit counsellors provide free debt analysis. During a one-on-one meeting, they can help you decide on the steps you need to take to achieve financial freedom.

An advisor can also work with you to determine what monthly payment is best for your budget. They will then negotiate with creditors on your behalf to lower interest rates and eliminate penalties.

Aside from counselling, Consolidated Credit provides various debt relief options to suit various financial situations. Debt consolidation loans are among these options. As a result, you can find appropriate solutions for your situation.

Consolidated Credit Canada

  • More than 500,000 Canadians helped in 10 years
  • Almost $500 million in debt eliminated
  • 300+ hrs. of education offered each year
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Consolidated Credit Canada

Consolidated Credit Canada offers the best debt consolidation services with over 15 years of experience helping Canadians get out of debt. They claim to have offered credit counselling to over 500,000 Canadians, with $500 million debt eliminated.

Their service offerings include helping you find debt consolidation solutions suitable for your situation. They also provide a host of debt education and financial calculators.

Debt.ca

  • Reduce Your Payments By Up To 50%
  • Debt Help for Canadians
  • Canada’s one-stop solution to get out of debt
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Debt.ca

Some of the best debt consolidation services come from debt.ca. Their mission is to help Canadians learn how to make better financial decisions. They achieve this through financial education provided on their website, counselling, and free resources like debt calculators.

Debt.ca also provides debt relief solutions, including debt consolidation and debt negotiation. They connect you with experts who help you find an appropriate debt consolidation service for your situation. Although they provide a sought-after debt negotiation service, it’s limited to unsecured debts.

Loans Canada

  • Get linked with lenders irrespective of credit score
  • Secure most types of loans within 48 hours
  • Access an easy-to-use interactive online platform
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Loans Canada

Loans Canada is another company that offers the best debt consolidation services. Unlike other debt consolidation companies, Loans Canada isn’t a direct lender. This means they don’t provide debt relief directly to you.

Instead, Loans Canada will help you find a suitable third-party provider to help you manage your debt. Through Loans Canada, you can find an expert that provides debt consolidation loans.

Besides helping you find a company that offers the best debt consolidation services for you, they can negotiate with your creditors. This will help reduce your overall monthly payments and debt and rebuild your credit.

Total Debt Freedom

Total Debt Freedom

Total Debt Freedom

Offering debt relief for close to two decades, Total Debt Freedom provides some of Canada’s best debt consolidation services. They have a debt management program suited for those with debt between $10,000 and $500,000.

Their debt management program works for credit cards, department store credit cards, retail store credit cards, and other unsecured debts. The excluded debts include student loans and payday loans.

In addition, like other debt relief companies, they don’t work with debt that involves collateral. This includes car loans, mortgages, and other secured loans or lines of credit. However, if your vehicle is repossessed, their service can work for you.

Total Debt Freedom charges a fee based on the amount of enrolled debt. You can be charged anywhere between 18% and 25%.

They claim that most of their clients became debt-free within two to five years. And that they achieve this without losing a significant amount of money.

How Debt Consolidation Works

When looking into the best consolidation services, it’s crucial to understand how it all works. By doing so, you can settle on a deal that will get you out of an adverse financial situation, as opposed to one that buries you deeper.

Consolidating debt involves combining multiple debts into a single, more significant debt. This makes it easier to manage small debts.

When you consolidate your debt, you will take out a new loan. This loan may carry a lower interest rate and a reduced monthly payment.

The funds you receive pay off the smaller debts you intend to consolidate. Once your smaller debts are consolidated, you’ll only need to make one payment on the new loan.

You can get a debt consolidation loan from a credit union, bank, or finance company. These loans are typically settled within three to five years.

The lender can settle your debts with the loaned amount, or you can do it yourself. If you choose the latter, they deposit the money into your account, and you’re responsible for paying off your small debts.

  • The most common methods of debt consolidation in Canada include:
  • Credit card balance transfer: You get a new credit card and transfer your old card’s balances to it.
  • A debt repayment program: These are plans that reduce interest, consolidate debt payments into one affordable payment and get you debt-free within 5 years.
  • Lines of credit: This involves getting approval for a line of credit that can be used to consolidate debt.
  • Debt consolidation loan: It’s a type of personal loan you take out to streamline payments, get better terms, and lower your interest rate.
  • Home equity loan: This involves using the equity in your home to borrow.
Consolidation Services In Canada - Comparewise 3

The Benefits and Drawbacks of Debt Consolidation

When looking at the best debt consolidation services, consider the advantages and disadvantages of debt consolidation. They can help you make a decision that is best for your situation. These are the benefits and drawbacks of debt consolidation:

The Benefits

Easier Debt Management

Debt consolidation has the advantage of making debt easier to manage. Instead of having multiple bills to pay, you’ll only need to make a single payment. Because it’s the same amount each month, you’ll know exactly how much to set aside.

In addition, unlike with credit card payments, a debt consolidation loan has a clear start and end date. Therefore, you’ll know exactly when you’ll be debt-free. You can also say goodbye to worrying about bills with different due dates.

Reduced Repayment Period

A fixed loan payment will allow you to pay off your debts sooner. As a result, you save on interest overall.

The sooner you pay off your debts, the earlier you can achieve other financial goals. For instance, you can put money towards building an emergency fund.

Lower Interest and Monthly Payments

Debt consolidation also often affords you lower interest charges than what you currently pay on your credit card. In addition, it may reduce your monthly payment if you extend the loan term. Therefore, you can save money, and the time it’ll take to get out of debt.

Credit Score Boost

If your credit score was hit by poorly managed bills, debt consolidation could repair it. Although taking out a debt consolidation loan can negatively affect your credit initially, it’ll recover over time. However, this will only happen if you make your payments on time.

Payment history is significant to your credit score. Therefore, ensure you make timely payments. Given that you’ll only have one payment to make, it may be easier to settle what you owe every month.

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The Drawbacks

No Guarantees

Debt consolidation won’t make bad financial habits disappear. It only helps lessen the financial burden of multiple debts. Therefore, it’s possible to get into debt further if you don’t prioritize good money management behaviours.

Missing payments can set you back on your goal to become debt-free. It can also negatively affect your credit score. It may be harder to get other loans with competitive interest rates if your credit score falls.

Also, since your credit card accounts will remain open, you may run up new balances. This would undo all the work done to get out of debt. With financial education, the use of budgets, and self-restraint, you can avoid digging yourself deeper into a financial hole.

Higher Payments

It’s possible that you won’t get a lower interest rate. This could mean that you end up paying more than you do on current debts.

You will need a good credit score to qualify for competitive interest rates. Therefore, before opting for debt consolidation solutions, assess your credit score. If it’s too low, try to improve it before taking out a loan.

While extending your loan term for a lower monthly payment may seem like a good idea, it can have adverse effects. You may end up paying more in interest in the long run.

Upfront Costs

Depending on the lender you settle on, you may be charged various upfront costs. This includes:

  • Closing fees
  • Balance transfer fees
  • Loan origination fees

To avoid getting these charges, ask the lender about the fees associated with debt consolidation. Although some fees may be necessary, you must consider if they’re worth paying. This will help you decide if debt consolidation is the best route to take.

Remember to read the fine print carefully. Sign any documents only after you’re confident of what you’re getting yourself into.

Collateral or Co-signer May Be Required

You may need to pledge your home as collateral to apply for debt consolidation. This only applies if you have poor credit. If you default on payments, a lender could repossess your home.

Instead of collateral, you may need a co-signer for a loan. They will pay the debt if you default. Therefore, missing payments would not only adversely affect you but your co-signer as well.

When Should You Consolidate Your Debts?

Although anyone can get the best debt consolidation services to ease their financial troubles, it’s vital you know when it’s needed. Otherwise, you may create more problems for yourself that will be harder to get out of.

A few scenarios will inform you when to get a debt consolidation loan. This includes:

  • Spending more than you earn
  • Only making the minimum payments on your debts
  • Having credit card balances that keep rising
  • Getting rejected for a new credit card

If you’re in any of these boats, then you’ve just taken a good step by acknowledging it. Recognizing your financial situation will only help you make the best decisions. To determine further if getting a debt consolidation loan is best, ask yourself the following questions:

  • Are my monthly payments (rent or mortgage) below 50% of my gross monthly income?
  • Do I have sufficient cash flow to make payments toward my debt?
  • Can I pay off the total amount for the loan within 5 years?
  • Is this the best choice for me in the long run?
  • Am I financially prepared to make early payments?
  • Is my credit score good enough to qualify for a more competitive interest rate?
  • Have I planned how to avoid getting into more debt?
  • Will I need more than one year to pay off my debts?

If you can positively answer all these questions, you can opt for a debt consolidation loan. The most important thing is getting the new loan at a lower interest rate and paying it off in time. If you can’t achieve this, a debt consolidation loan will be counterproductive to your finances.

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When Shouldn’t You Consolidate Your Debts?

Although there are many reasons to pursue debt consolidation solutions, there are also several reasons to avoid them. Debt consolidation won’t magically fix your problems if you’re overwhelmed by debt. Also, if you can’t keep a handle on your spending, it’ll be futile.

It also won’t help you if you aren’t prepared to take serious steps towards reducing your debts. This includes making a plan to avoid additional unnecessary and excessive spending.

You should avoid debt consolidation if your total debts are more than half your income. This is a sign that you won’t cover the new monthly payment on the loan. If you’re receiving calls from debt collectors, it might be best to consider a debt relief program instead.

Also, if your debts can be paid off in less than a year, don’t get a debt consolidation loan. It won’t save you a significant amount of money.

Instead of a debt consolidation loan, consider eliminating your debts with another payoff method. You can try a debt snowball or debt avalanche approach.

10 Debt Consolidation Tips

Debt consolidation affords you additional breathing room and peace of mind about your financial situation. However, it can quickly turn into a bad idea when poorly managed. Consider the following tips for debt consolidation:

1.  Differentiate Between Debt Consolidation and Debt Settlement

Although it may sound like the same thing, consolidation and settlement are different debt management solutions. With debt settlement, a creditor accepts a portion of what you owe from a debt settlement company. This method can significantly damage your credit, and it’ll often cost you hundreds of dollars in fees.

If a debt settlement company portrays their service as debt consolidation, walk away. Agreeing to their terms will only make your financial situation worse.

2.  Compare Consolidation Solutions

Considering there are several ways to consolidate debt, assess all your options. A debt consolidation loan may be more suitable than a debt repayment program. Or a balance transfer card may be more appropriate.

Decide on a solution that’s best for your situation by comparing each. If you discover that the solution isn’t working at some point, don’t wait until you’ve missed payments to look for another.

3.  Address Deeper Issues

Be honest with yourself about how you got into debt. It’ll help you avoid making the same mistakes once you consolidate your debts.

Look at your spending to determine if you’re going beyond your means. To get the most success out of debt consolidation, you need to develop sound money habits and a balanced budget.

4.  Stop Using Your Credit Cards

Take drastic actions to avoid using your credit cards and building more debt. This must be your top priority once you’re paying off your consolidated debts and once you’ve finished making payments.

Experts claim extreme avoidance tactics like freezing your credit card in ice, locking it away, or cutting it up, work. However, you don’t need to take such extremes.

Simply build a strong mindset to exercise your commitment to your goal. Make a note stating why you want to be debt-free and place it in clear view so you can see it every day. Also, create reminders to assess your progress.

5.  Spend Within Your Means

A cardinal rule of debt consolidation is not overspending. While you may have a solution to your debt problem, spending beyond your budget can undo all your work.

6.  Find Out About Fees and Costs Before Consolidating

Always ask a lender about the fees and interest rates associated with their debt consolidation solutions. Ensure that it’s a detailed list and don’t settle for a verbal response. Knowing everything about fees and costs will protect you once you close the deal.

7.  Assess Your Credit

Review your credit reports periodically when making debt consolidation payments. Make sure that all your accounts are paid, and payments are recorded.

Also, ensure that there aren’t any issues and mistakes. If there are, report them to your credit bureau.

8.  Be Realistic With Your Budget

The number one rule of a successful consolidation is having a clear action plan. This includes creating a realistic budget.

Don’t only focus on the consolidation payments you need to make. Include infrequent expenses and account for holiday spending as well. It’s also best to apportion some money for fun to avoid splurging when the feeling you’ve been restrained too long arises.

Remember, making this commitment and sticking to it will allow you to ease back in the future. You will make additional charges once you have your debt under control.

9.  Find Help and Support

One thing people underestimate when consolidating debt is help and support. While having debt can appear like a shameful thing, it’s common with many people.

Having peers that support your goal to improve your finances can be a powerful motivator. It can also hold you accountable.

You can enlist the support of your family members or an online support group. If these methods don’t work for you, get professional support.

Debt Consolidation Conclusion

Finding the best debt consolidation services is the first step towards financial freedom. It can point you towards a lender that offers the solution you need to get out of a financial hole.

Once you have this knowledge, it’s essential to understand how debt consolidation works. Also, the different debt consolidation methods in Canada, including credit balance transfers and lines of credit.

You should determine which is the best solution for your situation or opt for something else. In addition, ensure you understand the pros and cons of debt consolidation. They will be your compass when deciding.

Once you’ve consolidated your debts, it’s vital to build good financial habits. Limit your spending on credit cards to avoid racking up more debt. Create a budget that will enable you to spend within your means.

Remember, you don’t have to approach your debt consolidation journey alone. You can enlist the help of a professional, support group, or family member.

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FAQs about
Debt Consolidation

What is debt consolidation?

Debt consolidation is a type of installment payment scheme in which all your unsecured debts are lumped into a single payment with one creditor. Usually, debts are consolidated by obtaining a fixed interest personal loan and using the funds obtained to pay off other loans and unsecured loans. Using this approach helps you pay off loans at the lowest possible rate and also makes repayment easy.

Who is debt consolidation for?

Debt consolidation offers excellent solutions for many people who struggle with debt and need a realistic solution to improve their financial prospects and management skills. Whether you’re looking for a course to improve how you manage debt and finances or require a more comprehensive program to handle serious debt, this non-profit company is an ideal option to consider.

What is a credit councelling?

Credit counselling involves looking carefully at your finances, guided by a financial expert. During this process, you carefully evaluate your income and expenditure and then craft a long-term debt resolution plan. This plan is focused on getting you out of debt and keeping you out of it for good. It may also include bargaining with your lenders to decrease interest rates on your loans. Overall, it is just a way to generate an expert-reviewed long-term debt exit plan.

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