What Is Debt Consolidation?

We’ve all seen the multitude of debt consolidation advertisements on TV. There is plenty of competition in the debt consolidation industry because sadly, many individuals are struggling financially and these businesses provide much needed financial relief. Mortgages, car loans, credit cards; people can attain loans from a wide variety of lenders for virtually anything these days. The challenge is that all these loans are hard to manage and if you fall behind in your monthly repayments, you can end up in a lot of trouble.

 

The notion behind debt consolidation is that you can take each of your existing debts together and consolidate them into one, easy to manage loan that is easier and gives you a much clearer picture of your financial future. For a number of people, there are a variety of benefits in consolidating your debts, and this article will explore debt consolidation in detail and the benefits they provide to give you a better understanding if debt consolidation is a good choice for your financial situation.

 

The Basics

 

Debt consolidation enables you to settle all your current debts with a new loan that often has different (and in many cases more enticing) interest rates and terms. There are a handful of reasons that individuals use debt consolidation services.

 

High-Interest Rates

All loans have varying interest rates and terms, however, credit cards probably have the highest interest rates of all loans. While credit card companies often have a no interest period of approximately 1 or 2 months, the interest rates after this time can skyrocket up to 25% or higher. If you end up in a position where you’re paying 25% interest on your credit card loans, it’s more than likely that your debt will cultivate much faster than you’re able to pay it off. Typically, debt consolidation can provide lower interest rates and better terms, which can save you lots of money in the long-term.

 

Too much confusion with multiple loans.

When you have many debts with different interest rates and minimum repayments that are due at different times, there’s no doubt that it can be very tough to manage and can become confusing at times. This increases the risk of forgeting a repayment which can give you a bad credit report. Debt consolidation substantially helps in this situation by combining all of your debts into one which is significantly easier to take care of and gives you a clearer picture of when you’ll be debt free.

 

High Monthly Repayments

When people are confronting multiple debts, it’s hard to manage your cash flow because of the high minimum repayments required for each debt. Further to this, different debts have different repayment dates and this can cause people to struggle just to make ends meet. If you miss a repayment because you simply don’t have the money, your interest rates are likely to be increased, you can get a poor credit report, and your financial condition can go south considerably quickly. Debt consolidation loans provide one repayment each month, and you can arrange your monthly repayment amounts depending upon the length of time you want your loan to be.

 

Having said all this, if you have an interest in consolidating your debts, it’s critical that you undertake appropriate research to find the best debt consolidation interest rates and terms and conditions. You’ll uncover a wide range of debt consolidation companies, some are good, some are bad, and some are downright predatory. Firstly, you’ll need to pick a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also need to look over the terms cautiously. Some consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees like application fees, legal fees, stamp duty and valuation. The reality is, there is a considerable amount of research that needs to be done before you can conclude if debt consolidation is the right option for you.

 

As you can obviously see, there are a range of benefits related to debt consolidation for individuals that are struggling financially. Lower interest rates and fees, lower monthly repayments, and less confusion with multiple debts can save you loads of money in the long-run, and it’s perhaps better for your mental wellbeing too. This article isn’t written to convince you to consolidate your debts, as it all depends upon your financial scenario. As a result of the complexity and the numerous variables to consider, it’s highly recommended that you seek professional advice so you can at least get an idea of what option is best for you if you’re experiencing financial problems. In some scenarios, filing for bankruptcy is a better alternative, so before you make any decisions about your financial future, get in touch with Bankruptcy Experts Gold Coast on 1300 879 867 or visit their website for more details: www.bankruptcyexpertsgoldcoast.com.au

 

By | 2017-06-22T00:16:51+00:00 June 22nd, 2017|Article, bankruptcy, Blog|0 Comments

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