All of us have seen the myriad of debt consolidation advertisements on television. There is a great deal of competition in the debt consolidation market because sadly, lots of individuals are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; people can obtain loans from a vast range of lenders for virtually anything these days. 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 notion 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 simpler and gives you a much clearer understanding of your financial future. For some people, there are a variety 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 condition.
Debt consolidation enables you to repay all your current debts with a new loan that generally has different (and in most cases more attractive) interest rates and terms. There are a handful of reasons why individuals 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. While credit card companies normally have a no interest period of around 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 highly 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 quite a few debts with varied 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 probability of forgeting a repayment which can give you a bad credit rating. Debt consolidation significantly helps in this situation by merging all of your debts into one which is notably 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 difficult to manage your cash flow due to 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 report, and your financial condition can go south surprisingly quickly. Debt consolidation loans provide one repayment every month, and you can arrange your monthly repayment amounts based upon the length of time you wish your loan to be.
Nonetheless, if you’re interested in consolidating your debts, it’s necessary that you do appropriate research to find the best debt consolidation interest rates and terms and conditions. You’ll uncover a wide range of debt consolidation companies, some are good, some are bad, and some are straight-out predatory. To begin with, you’ll want to pick a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also want to assess the terms and conditions closely. Certain consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees for instance 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 obviously 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 loads of money in the long-term, and it’s perhaps better for your psychological wellbeing too. This article isn’t intended to convince you to consolidate your debts, as it all depends upon your financial scenario. 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 instances, declaring bankruptcy is a better option, so before you make any decisions about your financial future, phone Bankruptcy Experts Adelaide on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsadelaide.com.au