We’ve all seen the multitude of debt consolidation advertisements on television. There is a great deal of competition in the debt consolidation industry because sadly, lots of people are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; people can acquire loans from a vast range of lenders for just about anything in today times. The problem 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 notion behind debt consolidation is that you can take each of your existing debts together and consolidate them into one, easy to manage loan that is easier and gives you a far 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 circumstances.
Debt consolidation enables you to repay all your current debts with a new loan that commonly has different (and in most cases more enticing) interest rates and terms and conditions. There are a few reasons why 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. Even though credit card companies normally have a no interest period of approximately a couple of months, the interest rates after this time can surge 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 increase much faster than you’re able to pay it off. As a whole, debt consolidation can provide lower interest rates and better terms, which can save you a good deal of money in the long-term.
Too much confusion with multiple loans.
When you have a wide range of debts with varied interest rates and minimum repayments that are due at different times, there’s no question that it can be problematic to manage and can become confusing. This increases the likelihood of overlooking a repayment which can give you a poor credit report. Debt consolidation dramatically helps in this scenario by merging all of your debts into one which is far easier to take care of and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When people are confronting multiple debts, it’s difficult to manage your cash flow because 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 simply 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 state can go south considerably quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts based on the length of time you want your loan to be.
Despite the benefits, if you have an interest in consolidating your debts, it’s imperative that you conduct suitable research to find the best debt consolidation interest rates and terms and conditions. You’ll notice there’s a large range of debt consolidation companies, some are good, some are bad, and some are entirely predatory. First and foremost, you’ll need to opt for a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also want to take a look at the terms and conditions diligently. Various consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees such as application fees, legal fees, stamp duty and valuation. The fact is, there is a lot of research 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 range 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 considerable amount of money in the long-run, and it’s most probably better for your mental wellbeing too. This article isn’t intended to encourage you to consolidate your debts, as it all relies on your financial state of affairs. Due to 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 circumstances, declaring bankruptcy is a better alternative, so before you make any decisions about your financial future, talk with Bankruptcy Experts Perth on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsperth.com.au