Debt consolidation is the combining of all your unsecured debt (credit cards, payday loans, etc.) into one monthly payment. This can be done in three main ways; borrow money from a bank or a private lender, take on a Debt Management Program, or seek debt relief through a Consumer Proposal.
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Debt consolidation is only one of the many options available when seeking debt relief. In some cases, a debt consolidation loan is not the best option for controlling your debt. There are other options like a consumer proposal or bankruptcy that may be a better choice for you.
David Sklar & Associates does not provide debt consolidation loans. If you’re looking for a loan, we suggest you speak to your bank first to see if you qualify for one.
Many people find that a consumer proposal is a better option for debt relief than a debt consolidation loan. This is largely because, with a consumer proposal, you will be free and clear of all your debts in 5 years or less — without interest.
A consumer proposal is a legally binding agreement that will protect you from creditors, stop collections calls and wage garnishments, and allows you to keep your assets. A debt consolidation loan does not offer this protection and can still leave you exposed to collection call harassment.
When you speak to one of our licensed debt professionals, we will explain all the benefits and disadvantages of each solution, so you can make the right decision.
Unlike debt consolidation loans, a consumer proposal completely eliminates the high-interest payments you are currently making and can significantly reduce the amount you owe to your creditors. Our goal is to help take away your stress, not give you more.
We work within your budget to structure payments based on what you can afford. You are under no obligation to sign anything after your consultation. Take the time to learn about your options and then decide if this is the direction you want to take.
Debt consolidation loans are an attractive solution to people in debt because it’s a quick fix to end collection calls, eliminates the need to pay multiple creditors every month, and some lenders do not usually require credit checks, like a bank would. These may seem like benefits in the short-term but there can be long-term implications.
Third-party lenders often market high-interest debt consolidation loans as easy money. However, what they don’t tell you is that this”easy money” is hard to pay back and can result in a debt spiral that is even harder to get out of.
Some interest rates on these consolidation loans can reach almost 60%—the maximum amount of interest a lender is allowed to charge in Canada, without being considered criminal!If the combined interest rate on your loan is higher than what you are currently paying to your individual creditors, then you might find yourself in more debt then you started with. In many cases people find they have actually increased their payments not decreased them by choosing to take on a consolidation loan.
The Licensed Insolvency Trustees(LIT’s) at David Sklar & Associates are regulated by the government of Canada and do not work on commission like some of the third-party lenders do. Our staff are committed to helping you choose the best debt relief solution for your situation. Not all debt solutions lead towards a positive outcome. Some debt solutions can lead you further into debt and desperation. From our perspective, providing high interest loans to people already struggling with debt, is similar to handing someone a 50-pound weight, who is already drowning.
When reviewing all of the debt solution options available to you, we encourage you to consider how opting for a reliable government regulated, legally binding debt relief program like a consumer proposal can better set you up for future financial independence. Remember, easy money usually comes with strings attached.
The average interest rate on credit cards in Canada is 19%. The Canadian Government law is that lenders are not legally permitted to charge interest rates that exceed 60%. There are various types of non-bank loans, all of which have high-interest rates:
*Payday loans are exempt from the 60% interest rate limitation, therefore the annual interest rate on a payday loan is close to 400% or higher if you miss payments.
| Loan Amount | Monthly Payment | Interest Rate | Total Cost (Over 5 years) | Total Interest (Over 5 years) |
|---|---|---|---|---|
| $20,000 | $647.07 | 30% | $38,824 | $18,824 |
| $30,000 | $970.60 | 30% | $58,236 | $28,236 |
| $40,000 | $1,294.14 | 30% | $77,648 | $37,648 |
*Interest rates can fluctuate based on lender.
Before considering a high – interest loan like a payday loan or installment loan, consider the truth and implications behind these providers’ misleading promises.
Don’t be fooled by the misleading promises made by high-interest loan lenders who promise a quick & easy debt solution. Set yourself up for financial success.
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