Do you have too many debts? Have you fallen behind on payments due to an emergency or a professional setback? If so, you may find yourself looking into taking out debt consolidation loan to regain control of your finances. While you’re researching, however, it’s important to separate fact from fiction. Here are the five biggest myths surrounding debt consolidation.
Myth 1: Debt consolidation damages your credit score
Many people mistakenly believe that debt consolidation sends the message to credit agencies that you have let your debts spiral out of control and that they will lower your credit score as a result. Fortunately, this is not the case. Credit agencies treat debt consolidation loans just as they would any other loan. In fact, debt consolidation loans actually offer you a chance to boost your credit score! Making your loan payments on time will reflect well in your credit report.
Myth 2: Debt consolidation is time consuming and difficult
Often, people are deterred from the debt consolidation process because they think it will be too difficult or take too long to get off the ground. However, personal loan companies like Nectar have streamlined the borrowing process with 100% online lending solutions that make debt consolidation simpler and quicker than ever before. You can potentially get approved for your loan in as little as seven minutes and see your funds appear in your account the same day!
Myth 3: Debt consolidation proves that you’re bad with money
Quite the contrary! Debt consolidation is a responsible approach to addressing mounting debt. People fall behind on payments or amass multiple debts for many more reasons than irresponsibility. Debt consolidation proves that you take your debt seriously and have made an active effort to find the best solution, prevent late payments, simplify your budget, and protect your financial freedom.
Myth 4: Debt consolidation is the same as debt settlement or bankruptcy
There are many distinct ways to resolve debt issues, and debt consolidation is only one of them. It should not be confused with debt settlement or bankruptcy, both of which are more consequential approaches. With debt settlement, you work with a financial lawyer or other third-party professional to negotiate a reduced debt with your creditors. Bankruptcy, meanwhile, is legal process to seek debt relief. Debt consolidation is a more measured approach, one that preserves your financial independence.
Myth 5: Debt consolidation reduces your debt
Ultimately, anyone considering consolidating their debts needs to understand that doing so will not reduce the amount you owe. If you owe $10,000 in credit card fees, $5,000 in medical bills, and $500 in late electric and water bills, you will still have $15,500 in debt. What debt consolidation does is offer major benefits, including helping you catch up with late payments, eliminating late fees and avoidable interest, and lowering your overall interest payables by collecting your debts under one roof.
Debt consolidation made easy
Whether you need a personal loan for credit card payments, medical expenses, or just late bills, Nectar has you covered. Don’t let heaps of debt bury you. Get started with Nectar’s 100% online loan calculator today!
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