We’ve all seen the multitude of debt consolidation advertisements on TV. There is a lot of competition in the debt consolidation market because sadly, lots of people are struggling financially and these businesses provide much needed financial relief. Mortgages, car loans, credit cards; individuals can get loans from a large variety of lenders for just about anything nowadays. The dilemma is that all these loans are tough to manage and if you fall behind in your monthly repayments, you can end up in a lot of trouble.
The concept 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 simpler and gives you a much clearer picture of your financial future. For many individuals, there are a range of benefits in consolidating your debts, and this article will explore debt consolidation thoroughly and the advantages they provide to give you a better understanding if debt consolidation is a good alternative for your financial situation.
Debt consolidation enables you to settle 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 range of reasons that individuals use debt consolidation services.
All loans have varying interest rates and terms, however, credit cards possibly have the highest interest rates of all loans. Although credit card companies generally 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 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. Often, debt consolidation can provide lower interest rates and better terms and conditions, which can save you a considerable amount of money in the long-term.
Too much confusion with multiple loans.
When you have plenty of debts with varied interest rates and minimum repayments that are due at different times, there’s no question that it can be hard to manage and can become confusing. This increases the possibility of missing a repayment which can give you a bad credit report. Debt consolidation substantially helps in this scenario by merging all of your debts into one which is significantly easier to handle and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When individuals are being confronted by multiple debts, it’s tough to manage your cash flow as a result of the high minimum repayments required for each debt. On top of this, different debts have different repayment dates and this can cause individuals to struggle just to make ends meet. If you miss a repayment because you just don’t have the money in the bank, your interest rates are likely to be increased, you can get a bad credit history, and your financial condition can go south considerably quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts depending on the length of time you want your loan to be.
Despite the benefits, if you have an interest in consolidating your debts, it’s crucial that you undertake plenty of research to find the best debt consolidation interest rates and terms. You’ll notice there’s a wide variety of debt consolidation companies, some are good, some are bad, and some are straight-out predatory. First and foremost, you’ll need to opt for a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also need to assess the terms diligently. Various consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees for instance application fees, legal fees, stamp duty and valuation. The fact is, there is a lot 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 number 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 a great deal of money in the long-run, and it’s probably 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 position. 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 hardship. In some scenarios, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, phone Bankruptcy Experts Kalgoorlie on 1300 795 575 or visit their website for more information: www.bankruptcyexpertskalgoorlie.com.au