With a down trend seeming incessant in global economy, it is becoming increasingly difficult for students to manage expenses and pay off their bills and other services. With a general fall in economy, the earning is weakening, and many students in Canada are riddled with consumer debts. Credit cards and other consumer debts carry very high interest rates, making even the minimum due amounts unaffordable for the students. To make the matter worse, the payment of minimum due amount every month, hardly has any contribution to clearing off the debt completely. Being in debt can make them feel as if they are caught in never ending debt trap and are unable to free themselves. For all those students who are weighed down by the burden of multiple loans and are feeling buried, the student debt consolidation is the appropriate service for them.
Student debt consolidation Canada is a scheme to consolidate multiple debts into one in which the net interest rate reduces to a large extent thereby providing a huge amount of saving to the user. The individual takes out a single Loan to pay off all the other debts and from there on he has to pay only one easily manageable EMI as it is much lower than his earlier monthly installments.
In most debt consolidation cases, the repayment duration is also extended so monthly installment is much smaller thereby making some saving in the pocket every month. This also supports students in managing their day to day expenses.
Another form of debt consolidation involves credit counseling. The credit counselor intermediates between the borrower and creditors to negotiate and finalize a settlement that is affordable to the borrower. Many times the settled amount comes out to be much less than what he had actually owed and of course an overall much lower interest rate.
Students can combine their personal loans, consumer loans and credit cards in debt consolidation however the federal or government aided loans should not be combined with private debts otherwise students will lose their additional benefits. Debt consolidation also helps students in improving their credit score.
Another advantage of student debt consolidation is that it helps users to beat inflation and locking the interest rate also contributes to big saving. To understand this concept one needs to understand the basics. Inflation is the rise of the prices of goods etc. comparing it with the country’s currency or alternatively, it reduces the purchasing power of the citizens. Debt consolidation facility enables students to lock the interest rates during the period of hyperinflation thus loan keeps getting cheaper as value of money reduces during the period of inflation. The interest rate variation with inflation is the most important factor to be considered while analyzing the amount of money saving with student debt consolidation.