Nearly all of us have seen the multitude of debt consolidation advertisements on television. There is a lot 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 huge variety of lenders for just about anything in today times. The trouble is that all these loans are hard to manage and if you fall behind in your monthly repayments, you can find yourself in a lot of trouble.
The concept behind debt consolidation is that you can take each of your existing debts together and consolidate them into one, easy to handle loan that is easier 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 circumstances.
Debt consolidation enables you to settle all your current debts with a new loan that usually has different (and in many cases more desirable) interest rates and terms and conditions. There are a range of reasons that individuals use debt consolidation services.
All loans have differing interest rates and terms and conditions, however, credit cards likely have the highest interest rates of all loans. While credit card companies usually have a no interest period of approximately 1 or 2 months, the interest rates after this time can escalate 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 cultivate much faster than you’re able to pay it off. Often, debt consolidation can provide lower interest rates and better terms, which can save you loads 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 difficult to manage and can become confusing. This increases the chance of forgeting a repayment which can give you a bad credit history. Debt consolidation dramatically helps in this situation by merging all of your debts into one which is much easier to take care of and gives you a clearer picture of when you’ll be debt free.
High Monthly Repayments
When people are facing multiple debts, it’s very difficult to manage your cash flow as a result of the high minimum repayments required for each debt. On top of 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 just 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 scenario can go south considerably quickly. Debt consolidation loans provide one repayment every month, and you can negotiate your monthly repayment amounts based upon the length of time you want your loan to be.
With this being said, if you have an interest in consolidating your debts, it’s imperative that you perform proper research to find the best debt consolidation interest rates and terms and conditions. You’ll notice there’s a vast array of debt consolidation companies, some are good, some are bad, and some are downright 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 need to assess the terms diligently. A number of consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees for example 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 determine if debt consolidation is the right option for you.
As you can obviously see, there are a range 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 good deal of money in the long-run, and it’s most likely better for your emotional wellbeing too. This article isn’t written to convince you to consolidate your debts, as it all depends upon your financial condition. 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 distress. In some circumstances, declaring bankruptcy is a better alternative, so before you make any decisions about your financial future, speak with Bankruptcy Experts Geraldton on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsgeraldton.com.au