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Zach Raus is President of BHG’s Lending Division. An expert on financing for dentists and other licensed healthcare professionals, Raus oversees the lending team responsible for funding financial solutions for licensed healthcare practitioners and other highly-skilled professionals. Bankershealthcaregroup.com.
Whether you’re a practice owner or dental associate, managing business debt on top of other responsibilities can only add to your stress. If you carry credit card balances or have outstanding business loans, having to deal with multiple balances, payments, and due dates can be time-consuming and costly. Here are five reasons why consolidation could be an easier way to manage your debt.
By reducing your monthly liabilities, you may end up with a lower cumulative monthly payment, which means more money stays with you. Having extra cash can help you stay focused on the big picture without worrying about delayed insurance reimbursements, co-pays and deductibles. It can also help you plan better for taxes or rising or unexpected operational costs. Calculate what your potential savings could be and set it aside for another purposes, like practice investments or taxes. With a debt consolidation loan, borrowers know exactly what they’re paying every month, which can enable better financial forecasting.
One of the benefits of consolidating your debt is the opportunity to potentially get a better-fixed-interest rate. Compared to having to pay multiple APRs, this can be an additional cost savings. If you’re carrying multiple smaller loans with high interest rates, consolidating your debt into a single loan with a lower interest rate can free up cash for more immediate needs at your practice. You can then take these savings to reinvest back into your practice or profession.
With consolidation, you no longer have to track multiple due dates. This frees you from having to remember to make several different payments from multiple creditors. With a debt consolidation loan, borrowers only need to make one single payment per month to one account. Merging multiple debts into a single monthly payment also reduces the likelihood of missed payments. This simplicity can make your books easier to keep and help lower your stress.
Consolidating your debt can potentially help you improve both your personal and business credit score by decreasing your revolving debt and helping you pay down all of your debts in a consistent manner. Credit utilization-the ratio of your balances versus the combined limit across all of your accounts-represents up to 30 percent of your credit score. The cumulative effect of debt consolidation is a lower utilization ratio that lenders prefer-and a potential boost to your score.
Multiple debts can mean multiple collateral assignments and restrictions assigned to the business. You can cut that down (and maybe even eliminate it) by consolidating your debt with one lender.
As a dental professional, you already have a lot on your mind-and your schedule. If you’re finding it challenging to juggle multiple payments, multiple due dates, and a lack of cash, then debt consolidation might be a good solution for you.