Most of us have seen the myriad of debt consolidation advertisements on TV. There is a considerable amount of competition in the debt consolidation industry because sadly, many people are struggling financially and these businesses provide much needed financial relief. Mortgages, car loans, credit cards; individuals can acquire loans from a huge variety of lenders for almost anything in today times. The issue is that all these loans are difficult 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 your existing debts together and consolidate them into one, easy to manage loan that is simpler and gives you a much clearer understanding of your financial future. For a number of individuals, there are a variety of advantages in consolidating your debts, and this article will take a look at debt consolidation thoroughly and the advantages they provide to give you a better understanding if debt consolidation is a good opportunity for your financial situation.
Debt consolidation allows you to pay off all your current debts with a new loan that often has different (and in most cases more enticing) interest rates and terms. There are a handful of reasons why people use debt consolidation services.
All loans have differing interest rates and terms, however, credit cards possibly have the highest interest rates of all loans. While credit card companies regularly have a no interest period of around one or two months, the interest rates after this time can skyrocket 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 highly likely that your debt will grow 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-term.
Too much confusion with multiple loans.
When you have various debts with varied interest rates and minimum repayments that are due at different times, there’s no question that it can be difficult to manage and can become confusing at times. This increases the probability 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 take care of and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When people are being confronted by multiple debts, it’s challenging to manage your cash flow because 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 just don’t have the cash, your interest rates are likely to be increased, you can get a bad credit rating, and your financial circumstances can go south particularly quickly. Debt consolidation loans provide one repayment each month, and you can arrange 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 vital that you perform sufficient research to find the best debt consolidation interest rates and terms. You’ll come across a large range of debt consolidation companies, some are good, some are bad, and some are downright predatory. Firstly, you’ll need to choose a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also need to inspect the terms and conditions cautiously. A number of consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees including application fees, legal fees, stamp duty and valuation. The reality 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 evidently see, there are a number of benefits associated with 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 most likely better for your mental wellbeing too. This article isn’t aimed to encourage you to consolidate your debts, as it all depends upon your financial state of affairs. 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 circumstances, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, phone Bankruptcy Experts Shepparton on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsshepparton.com.au