Have you borrowed several debts and looking for a solution to consolidate all of your debt? You’re in the right place. You had a word with your certified non-profit credit counselor about debt consolidation by York Credit. You might be suggested the best option that works for you at an optimum level. If you’re a Canadian, the best alternate for debt consolidation is a line of credit or an overdraft facility.
How a Line Of Credit or Overdraft Facility works?
When you get a line of credit or overdraft facility, the creditor offers you a credit card. This allows you to purchase and combine your various loans, bills, and other credit card balances into one. Lines of credit and overdraft may either secured Or unsecured. It depends on your eligibility and a few factors as follows:
- According to the economy, the lender’s policies change time to time
- Your credit rating
- Your net worth (your assets vis-à-vis your debts)
The consolidation loans are different from Lines of credit and overdrafts, as a lump sum is not given in it. But, you have to make minimum monthly repayments just like a regular loan.
More precisely, overdrafts let your bank account balance to drop below zero, primarily as a credit card until your debit account hits zero. On the contrary, lines of credit act like a separate credit account that you can use whenever you require money in cash.
Benefits of A Line Of Credit Or Overdraft Facility
- You can get the loan at the very low-interest rate, particularly given the currently low Bank of Canada Prime Rate.
- A minimum monthly refund is usually very flexible and you can pay off the loan as quickly or as slowly as you would like.
- There are early repayment penalties for usual loans. You can save the interest and can clear the loan without any charges if you clear the debt before time. You may keep the account open even after your loan consolidation efforts and can use an ongoing line of credit. However, you need to remain in good standing with the lender.
- In the case of no money, you need to pay the minimum payments that cover the interest.
- Negotiation is so easy and quick in line of credit or an overdraft than a loan and other debt consolidation options.
- In credit card, you need to pay interest from the moment you get a card, but in LOC or overdraft, you only have to pay interest from the time you access the money.