Nearly all of us have seen the multitude of debt consolidation advertising campaigns on television. There is plenty of competition in the debt consolidation market 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 in today times. The issue is that all these loans are tough 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 bring all of your existing debts together and consolidate them into one, easy to manage loan that is easier and gives you a much clearer picture of your financial future. For a number of people, there are a variety of benefits in consolidating your debts, and this article will examine debt consolidation thoroughly and the advantages they provide to give you a better understanding if debt consolidation is a good choice for your financial condition.
Debt consolidation allows you to pay off all your current debts with a new loan that commonly has different (and in most cases more desirable) interest rates and terms and conditions. There are a range of reasons that people use debt consolidation services.
All loans have differing interest rates and terms and conditions, however, credit cards possibly have the highest interest rates of all loans. Although credit card companies normally have a no interest period of about a couple of months, the interest rates after this time can soar up to 25% or higher. If you end up in a position where you’re paying 25% interest on your credit card loans, it’s more than likely that your debt will cultivate much faster than you’re able to pay it off. Generally, debt consolidation can provide lower interest rates and better terms, which can save you lots 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 very difficult to manage and can become confusing at times. This increases the chance of missing a repayment which can give you a poor credit history. Debt consolidation considerably helps in this scenario by combining all of your debts into one which is far easier to manage and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When individuals are grappling with multiple debts, it’s hard to manage your cash flow due to 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 poor credit history, and your financial circumstances can go south considerably quickly. Debt consolidation loans provide one repayment each month, and you can arrange your monthly repayment amounts based on the length of time you want your loan to be.
With this being said, if you have an interest in consolidating your debts, it’s important that you undertake proper research to find the best debt consolidation interest rates and terms. You’ll discover a large variety of debt consolidation companies, some are good, some are bad, and some are entirely predatory. First and foremost, you’ll need to select 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 and conditions carefully. A number of consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees like application fees, legal fees, stamp duty and valuation. The fact is, there is a lot of homework that needs to be done before you can figure out if debt consolidation is the right option for you.
As you can obviously 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 plenty of money in the long-run, and it’s most likely better for your mental wellbeing too. This article isn’t intended 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 difficulty. In some situations, filing for bankruptcy is a better alternative, so before you make any decisions about your financial future, speak to Bankruptcy Experts Shellharbour on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertsshellharbour.com.au