Nearly all of us have seen the multitude of debt consolidation advertisements on TV. There is a huge amount of competition in the debt consolidation industry because unfortunately, lots of individuals are struggling financially and these companies provide much needed financial relief. Home loans, car loans, credit cards; people can obtain loans from a huge variety of lenders for almost anything in today times. The challenge is that all these loans are hard to manage and if you fall behind in your monthly repayments, you can end up in a lot of trouble.
The idea behind debt consolidation is that you can take all 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 number of benefits in consolidating your debts, and this article will take a look at debt consolidation thoroughly and the benefits they provide to give you a better understanding if debt consolidation is a good opportunity for your financial circumstances.
Debt consolidation enables 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. There are numerous reasons that people use debt consolidation services.
All loans have varying interest rates and terms and conditions, however, credit cards probably have the highest interest rates of all loans. Though credit card companies frequently have a no interest period of approximately one or two months, the interest rates after this time can soar 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 more than 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 huge amount of money in the long-run.
Too much confusion with multiple loans.
When you have many debts with varied 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 likelihood of forgeting a repayment which can give you a poor credit history. Debt consolidation dramatically helps in this scenario by combining all of your debts into one which is notably easier to handle and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When people are facing multiple debts, it’s very difficult 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 people to struggle just to make ends meet. If you miss a repayment because you just don’t have the cash, your interest rates are likely to be increased, you can get a bad credit history, and your financial circumstances can go south rather 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.
With this being said, if you’re interested in consolidating your debts, it’s imperative that you undertake adequate research to find the best debt consolidation interest rates and terms. You’ll come across a vast range of debt consolidation companies, some are good, some are bad, and some are straight up predatory. Firstly, 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 look over the terms and conditions very carefully. A number of 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 fact is, there is a great deal of research that needs to be done before you can decide if debt consolidation is the right option for you.
As you can easily 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 plenty of money in the long-run, and it’s most probably better for your mental wellbeing too. This article isn’t meant to encourage you to consolidate your debts, as it all depends on your financial condition. 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, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, talk to Bankruptcy Experts Alice Springs on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsalicesprings.com.au