Most of us have seen the myriad of debt consolidation advertisements on TV. There is a lot of competition in the debt consolidation market because sadly, many individuals are struggling financially and these companies provide much needed financial relief. Home loans, car loans, credit cards; individuals can obtain loans from a large range 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 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 people, there are a number of benefits in consolidating your debts, and this article will examine debt consolidation in detail and the benefits they provide to give you a better understanding if debt consolidation is a good alternative for your financial condition.
Debt consolidation allows you to settle all your current debts with a new loan that typically has different (and in many cases more desirable) interest rates and terms and conditions. There are a handful of reasons why individuals use debt consolidation services.
All loans have differing interest rates and terms and conditions, however, credit cards probably have the highest interest rates of all loans. Although credit card companies commonly have a no interest period of about a couple of months, the interest rates after this time can escalate 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 more than likely that your debt will increase much faster than you’re able to pay it off. Generally speaking, debt consolidation can provide lower interest rates and better terms, which can save you loads of money in the long-run.
Too much confusion with multiple loans.
When you have quite a few debts with different interest rates and minimum repayments that are due at different times, there’s no question that it can be very tough to manage and can become confusing at times. This increases the possibility of forgeting a repayment which can give you a bad credit rating. Debt consolidation certainly helps in this scenario by merging all of your debts into one which is much easier to take care of and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When individuals are experiencing 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 report, and your financial condition can go south considerably quickly. Debt consolidation loans provide one repayment every month, and you can negotiate your monthly repayment amounts based on the length of time you want your loan to be.
Having said all this, if you’re interested in consolidating your debts, it’s critical that you do suitable research to find the best debt consolidation interest rates and terms. 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 pick a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also want to take a look at the terms vigilantly. Various consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees for example application fees, legal fees, stamp duty and valuation. The truth is, there is a great deal of homework that needs to be done before you can conclude if debt consolidation is the right option for you.
As you can clearly see, there are a lot 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 good deal of money in the long-term, and it’s most likely better for your emotional wellbeing too. This article isn’t aimed to persuade you to consolidate your debts, as it all depends on your financial condition. Because 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 hardship. In some situations, filing for bankruptcy is a better solution, so before you make any decisions about your financial future, get in touch with Bankruptcy Experts Tennant Creek on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertstennantcreek.com.au