Nearly all of us have seen the plethora of debt consolidation advertising campaigns on TV. There is a lot of competition in the debt consolidation market because sadly, many people are struggling financially and these businesses provide much needed financial relief. Mortgages, car loans, credit cards; people can acquire loans from a vast variety of lenders for pretty much 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 notion behind debt consolidation is that you can bring all your existing debts together and consolidate them into one, easy to handle loan that is simpler and gives you a much clearer picture of your financial future. For many individuals, 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 choice for your financial position.
Debt consolidation allows you to settle all your current debts with a new loan that frequently has different (and in most cases more appealing) interest rates and terms and conditions. There are a handful of reasons why individuals use debt consolidation services.
All loans have differing interest rates and terms, however, credit cards most probably have the highest interest rates of all loans. While credit card companies frequently have a no interest period of approximately one or two months, the interest rates after this time can escalate up to 25% or higher. If you find yourself in a position where you’re paying 25% interest on your credit card loans, it’s likely that your debt will increase much faster than you’re able to pay it off. Generally, debt consolidation can provide lower interest rates and better terms and conditions, which can save you plenty of money in the long-run.
Too much confusion with multiple loans.
When you have plenty of debts with different 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. This increases the likelihood of forgetting a repayment which can give you a poor credit report. Debt consolidation considerably helps in this situation by merging all of your debts into one which is far easier to handle and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When individuals are being confronted by multiple debts, it’s tough 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 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 bad credit history, and your financial state can go south particularly quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts based on the length of time you wish your loan to be.
Nonetheless, if you have an interest in consolidating your debts, it’s important that you do proper research to find the best debt consolidation interest rates and terms. You’ll discover a vast array of debt consolidation companies, some are good, some are bad, and some are straight up predatory. Firstly, you’ll need to opt for a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also need to examine the terms and conditions diligently. Various 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 reality is, there is a considerable amount 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 variety 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 great deal of money in the long-term, and it’s most probably better for your emotional well being too. This article isn’t written to persuade you to consolidate your debts, as it all depends upon your financial condition. As a result of 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 situations, filing for bankruptcy is a better solution, so before you make any decisions about your financial future, contact Bankruptcy Experts Frankston on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsfrankston.com.au