Should I Take Out a Loan to Pay Off My Consumer Proposal Early?
Consumer Proposals are major steps in your debt management process.
They will stick around on your credit history for at least three years; so, naturally, many want to get through with the payments as quickly as possible.
This is due to the fact that ridding yourself of the proposal by making your final payment sooner will lead to a clear credit history more quickly.
With this in mind, many want to take out a loan to expedite the process.
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However, there are definitely some catches to this matter which make getting a loan less desirable.
For one, with consumer proposals, you interest is halted.
That means you pay out only the base amount owing in a set number each pay period.
Loans are a different matter entirely.
Dealing With Loans
Interest accrues on your loans which means that taking a loan in order to pay out your proposal will lead you to more money owing.
Chances are, you got to a position leading to a consumer proposal as a result of financial hardship.
Further debt and accruing interest can create a climate which causes further hardship.
A Long & Worthwhile Journey
Consider that the task of getting rid of your debt is more of a journey down a road to financial recovery than one big sprint.
The best way to ensure that once you pay off your consumer proposal, you stay clear of the situations that got you there, is to make solid financial choices.
Though taking out a loan may seem like a savvy approach to getting rid of the debt, it can actually generate more problems down the line.
If you are in doubt, consider reaching out to a credit counsellor for professional advice.
They can offer you objective insight into your financial situation which will help to steer you in the right direction.
Usually, however, paying high rates of interest (an unfortunate truth if a proposal is on your file) represents less of a road to recovery and more of a path towards future financial struggle.
The best bet is to put in your time, make your payments, and go from there.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal