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Seven Reasons Why Borrowers Consolidate Debt

As a borrower in Canada, you’ve probably come across the term debt consolidation and maybe asked yourself questions like, “Why consolidate debt?” or, “How does debt consolidation work?” 

Debt consolidation is an excellent strategy if you’re having trouble managing multiple sources of debt. For several reasons, more and more borrowers in Canada are gradually warming up to using loan consolidation as a debt management tool. 

Simplified Payments

When using a loan for debt consolidation, the borrower takes out a large loan to pay off all their outstanding debts. As such, having only one monthly payment to worry about rather than multiple can make it much easier for borrowers to keep track of their debt payments. A simplified payment structure with a single payment can save borrowers the stress of worrying about multiple debt payments. 

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Lower Interest Rates

According to Forbes, Canadian credit cards run at high interest rates of 19.99% to 25.99%. With multiple debt payments, the cost of your interest payments is likely high purely because you have to pay interest on numerous loans. By consolidating your debt, you are only obligated to make interest payments on a single loan rather than multiple, significantly reducing the cost of your interest payments. 

Improved Credit Health

As you continue to make timely payments on your consolidation loan, you will see a significant improvement in your credit report. Payment history makes up a significant percentage of your credit report, so establishing a positive payment history through timely payments can improve your creditworthiness. 

Reduced Risk Of Missing Payments 

A consolidation loan’s payment structure and nature allow individuals to be more consistent with payments because they aren’t juggling multiple debt payments from various sources. Instead, their sole obligation is to make payments on their consolidation loan. Staying on top of your costs becomes much easier with only one payment. 

Pay Off Debt Faster 

Paying off your debt in full can take much longer if you have multiple monthly payments from various loans. With a consolidation loan, borrowers can combine various debt sources under one loan, which they can pay off directly rather than making multiple loan payments. By focusing on one loan obligation rather than multiple, borrowers will take much less time to pay off their debts. 

Accommodate To Current Living Costs 

There’s a chance that your cost of living has increased with rent, utility, and grocery bills due to changes in market conditions. As a result, accommodating debt payments may be more challenging as your cost of living increases. Borrowers can solve this problem by consolidating their debts, making debt payments more manageable and giving them more breathing room to adjust to the rising living costs. 

Reduce Debt-related Stress 

Ultimately, dealing with multiple debt obligations isn’t the most enjoyable and can sometimes be stressful. It can take some time to fully pay off numerous debt sources; the longer this process lasts, the more burdensome your debt obligations become. Consolidating your debts can help put you on the path to becoming debt-free, which can alleviate the stress of debt management. 

Conclusion: Consolidate Loans With Alpine Credits 

Alpine credits have helped borrowers across Canada consolidate their loans through home equity financing. With customized home equity solutions tailored to your financial needs, Alpine Credits can help individuals consolidate their loans.  

Alpine Credits doesn’t prioritize your credit score or income status when you apply but focuses on how much equity is available within your home. Click on our application form, which will only take a few minutes to complete, and a Financial Solutions Specialist will contact you about the next steps. 

Apply now

Frequently asked questions

In most cases, borrowers look to consolidate their debts because they’re dealing with multiple debt obligations and are struggling to pay all of them. Consolidating debt is a viable way to streamline their debt payments and help them pay off their debts faster. 

Yes, you can use your credit card after consolidating your debts. Although, it can help to keep track of your spending to ensure you don’t take on too much additional credit card debt.