We’ve all seen the multitude of debt consolidation advertisements on TV. There is a great deal of competition in the debt consolidation market because sadly, lots of people are struggling financially and these companies provide much needed financial relief. Home loans, car loans, credit cards; people can get loans from a broad variety of lenders for just about anything nowadays. The trouble is that all these loans are hard to manage and if you fall behind in your monthly repayments, you can find yourself in a lot of trouble.
The concept behind debt consolidation is that you can bring all of your existing debts together and consolidate them into one, easy to handle loan that is simpler and gives you a far clearer picture of your financial future. For some people, there are a variety of benefits in consolidating your debts, and this article will explore debt consolidation in detail and the advantages they provide to give you a better understanding if debt consolidation is a good choice for your financial circumstances.
Debt consolidation enables you to pay off all your current debts with a new loan that normally has different (and in most cases more appealing) interest rates and terms. There are a number of reasons that people use debt consolidation services.
All loans have varying interest rates and terms and conditions, however, credit cards certainly have the highest interest rates of all loans. Even though credit card companies commonly have a no interest period of around a couple of months, the interest rates after this time can skyrocket up to 25% or higher. If you find yourself in a position where you’re paying 25% interest on your credit card loans, it’s likely that your debt will cultivate much faster than you’re able to pay it off. In general, debt consolidation can provide lower interest rates and better terms, which can save you a great deal of money in the long-term.
Too much confusion with multiple loans.
When you have multiple debts with different interest rates and minimum repayments that are due at different times, there’s no question that it can be very difficult to manage and can become confusing at times. This increases the likelihood of overlooking a repayment which can give you a poor credit rating. Debt consolidation greatly helps in this situation by merging all of your debts into one which is notably easier to manage and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When people 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 cash, your interest rates are likely to be increased, you can get a bad credit history, and your financial situation can go south particularly quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts depending on the length of time you wish your loan to be.
With this being said, if you have an interest in consolidating your debts, it’s crucial that you conduct appropriate research to find the best debt consolidation interest rates and terms and conditions. You’ll notice there’s a large variety of debt consolidation companies, some are good, some are bad, and some are outright predatory. To start with, you’ll want to choose a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also want to examine the terms cautiously. A number of consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees like application fees, legal fees, stamp duty and valuation. The reality is, there is plenty of research that needs to be done before you can conclude if debt consolidation is the right option for you.
As you can evidently see, there are a lot of benefits associated with 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 a huge amount of money in the long-run, and it’s probably better for your emotional wellbeing too. This article isn’t intended to encourage you to consolidate your debts, as it all relies on your financial condition. 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 difficulty. In some instances, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, get in touch with Bankruptcy Experts Wangaratta on 1300 795 575 or visit their website for more information: www.bankruptcyexpertswangaratta.com.au