Nearly all of us have seen the plethora of debt consolidation advertising campaigns on TV. There is plenty of competition in the debt consolidation industry because unfortunately, lots of people are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; individuals can acquire loans from a broad range of lenders for pretty much anything in today times. The problem 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 notion behind debt consolidation is that you can take all of your existing debts together and consolidate them into one, easy to handle loan that is simpler and gives you a much clearer picture of your financial future. For many people, there are a range 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 option for your financial circumstances.
Debt consolidation enables you to settle all your current debts with a new loan that generally has different (and in most cases more desirable) interest rates and terms. There are a handful of reasons that people 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. Though credit card companies commonly have a no interest period of approximately 1 or 2 months, the interest rates after this time can surge up to 25% or higher. If you end up in a situation where you’re paying 25% interest on your credit card loans, it’s very likely that your debt will cultivate much faster than you’re able to pay it off. Commonly, 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 several debts with varying 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 forgeting a repayment which can give you a poor credit report. Debt consolidation significantly helps in this situation by combining 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 individuals are confronting multiple debts, it’s tough to manage your cash flow as a result of the high minimum repayments required for each debt. In addition to 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, your interest rates are likely to be increased, you can get a bad credit rating, and your financial position can go south rather quickly. Debt consolidation loans provide one repayment every month, and you can negotiate your monthly repayment amounts depending upon the length of time you wish your loan to be.
Despite the benefits, if you’re interested in consolidating your debts, it’s imperative that you conduct appropriate research to find the best debt consolidation interest rates and terms and conditions. You’ll come across a wide variety of debt consolidation companies, some are good, some are bad, and some are straight up predatory. First and foremost, you’ll want to opt for a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also want to inspect the terms and conditions closely. Certain consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees including application fees, legal fees, stamp duty and valuation. The truth is, there is plenty of research that needs to be done before you can determine if debt consolidation is the right option for you.
As you can obviously 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 a huge amount of money in the long-run, and it’s perhaps better for your emotional wellbeing too. This article isn’t aimed to encourage you to consolidate your debts, as it all depends on your financial state of affairs. 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 scenarios, filing for bankruptcy is a better option, so before you make any decisions about your financial future, speak with Bankruptcy Experts Taree on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertstaree.com.au