The cost of education is increasing day by day, and unless your parents have saved up enough for your college, you would have to take up a large sum loan to pursue higher studies. Depending on your academic performance and the type of course that you wish to take up, student loans can be availed with different tenures, rates of interest and collateral. Usually, the repayment of the loan begins after you complete the course and start working.
Issues Faced
It is crucial to handle finances well, especially when you have a significant student loan to repay. Since most first-time jobs do not pay that well, young professionals have to spend a considerable amount of their monthly income in paying off the loan, which leaves them little to no money for things like rent, utilities, food and other lifestyle expenses. Most individuals in such situations take up credit cards and personal loans to pay the bills.
Sooner than later, taking up loans becomes a habit out of desperation, and you are left with multiple debts on your hand. The challenge for you is not only to keep enough money aside every month for those repayments but also keep track of the changing rates of interest, repayment dates and other paperwork associated with those multiple loans.
Possible solution
Being a young professional, you must have many dreams and aspirations. Getting bogged down by debt is the last thing that will help you advance in your career. Experts say that outstanding loans are among the top five reasons for stress in a young professional’s life. In such a situation, a debt consolidation loan is a possible solution which can reduce some of that stress. By consolidating all your smaller loans, you give yourself the freedom of handling just a single line of credit, single monthly payment, and only one creditor.
Word of caution
Several critical factors will determine whether or not debt consolidation will work for you. Before you approach a debt consolidation company, make sure to consult a financial advisor to see if this is the route you should take. If the expert deems consolidation to be the ideal option for your situation, you can next seek the services of a consolidation company who will help you with the process and paperwork, and negotiate the best deal possible.
Unlike traditional lending institutions that determine your eligibility as an applicant based on your credit record, consolidation companies already know you are in a debt trap and do not have a sparkling credit history. A debt consolidation loan can be your way out of the debt mess, and it will also eventually improve your credit score.
You must check out the viability of a debt consolidation loan when you are laboring under multiple loans, but for it to work in improving your financial situation, you need to be cautious with your spending and avoid getting into such a situation again
