All of us have seen the myriad of debt consolidation advertisements on television. There is a lot of competition in the debt consolidation industry because unfortunately, lots of individuals are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; individuals can acquire loans from a wide variety of lenders for almost anything these days. The problem is that all these loans are difficult to manage and if you fall behind in your monthly repayments, you can find yourself in a lot of trouble.
The idea 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 far clearer picture of your financial future. For some people, there are a range of benefits in consolidating your debts, and this article will take a look at debt consolidation in detail and the benefits they provide to give you a better understanding if debt consolidation is a good opportunity for your financial condition.
Debt consolidation allows you to repay all your current debts with a new loan that commonly has different (and in most cases more appealing) interest rates and terms and conditions. There are a couple of reasons why individuals use debt consolidation services.
All loans have differing interest rates and terms, however, credit cards possibly have the highest interest rates of all loans. Even though credit card companies commonly have a no interest period of around 1 or 2 months, the interest rates after this time can rocket up to 25% or higher. If you find yourself in a situation where you’re paying 25% interest on your credit card loans, it’s highly likely that your debt will increase 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 a huge amount of money in the long-run.
Too much confusion with multiple loans.
When you have lots of debts with varied interest rates and minimum repayments that are due at different times, there’s no question that it can be challenging to manage and can become confusing. This increases the chances of overlooking a repayment which can give you a bad credit rating. Debt consolidation greatly helps in this scenario by combining all of your debts into one which is much easier to manage and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When individuals are facing multiple debts, it’s difficult to manage your cash flow as a result 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 history, and your financial state can go south rather quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts based on the length of time you want your loan to be.
With this being said, if you’re interested in consolidating your debts, it’s paramount that you undertake sufficient research to find the best debt consolidation interest rates and terms and conditions. You’ll uncover a large variety of debt consolidation companies, some are good, some are bad, and some are straight up predatory. Firstly, you’ll need to select a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also want to look over the terms and conditions thoroughly. Various consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees for example application fees, legal fees, stamp duty and valuation. The truth is, there is a great deal of research that needs to be done before you can decide if debt consolidation is the right option for you.
As you can easily see, there are a variety of benefits related to debt consolidation for people 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 probably better for your mental wellbeing too. This article isn’t meant to encourage you to consolidate your debts, as it all depends upon your financial circumstances. Because of the complexity and the many 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 difficulty. In some circumstances, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, phone Gold Coast Bankruptcy Centre on 1300 795 575 or visit their website for additional information: www.goldcoastbankruptcycentre.com.au