June 21, 2017 0

What Is Debt Consolidation?

Posted by:Charles Bosse onJune 21, 2017

Declaring Bankruptcy,Bankruptcy Gold Coast,Bankruptcy Advice

Most of us have seen the multitude of debt consolidation advertising campaigns on television. There is a lot of competition in the debt consolidation industry because sadly, lots of individuals are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; individuals can attain loans from a large variety of lenders for virtually anything nowadays. 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 take 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 some people, there are a variety of benefits in consolidating your debts, and this article will take a look at 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.

The Basics

Debt consolidation allows 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. There are a range of reasons that individuals use debt consolidation services.

High-Interest Rates

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 commonly have a no interest period of about 1 or 2 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 more than likely that your debt will increase much faster than you’re able to pay it off. In general, debt consolidation can provide lower interest rates and better terms and conditions, which can save you a huge amount of money in the long-term.

Too much confusion with multiple loans.

When you have a number of debts with different interest rates and minimum repayments that are due at different times, there’s no question that it can be very difficult to manage and can become confusing at times. This increases the probability of forgeting a repayment which can give you a bad credit history. Debt consolidation significantly helps in this situation by combining 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 challenging 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 money, your interest rates are likely to be increased, you can get a poor credit report, and your financial situation can go south surprisingly quickly. Debt consolidation loans provide one repayment every month, and you can negotiate your monthly repayment amounts depending upon the length of time you want your loan to be.

Having said all this, if you’re interested in consolidating your debts, it’s essential that you undertake plenty of research to find the best debt consolidation interest rates and terms. You’ll find a large variety of debt consolidation companies, some are good, some are bad, and some are downright predatory. First of all, 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 need to examine the terms diligently. Certain 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 truth is, there is a lot of research 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 lot of money in the long-term, and it’s most probably better for your emotional wellbeing too. This article isn’t intended to encourage you to consolidate your debts, as it all relies on your financial state of affairs. As a result 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 adversity. In some situations, declaring bankruptcy is a better option, so before you make any decisions about your financial future, contact Fresh Start Solutions Gold Coast on 1300 818 575 or visit their website for more information: http://freshstartsolutions.com.au/bankruptcy-goldcoast

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