Debt consolidation entails acquiring a loan for the sum of all of your unsecured debts from various credit providers at a reduced interest rate. In this way, you can settle all your high-interest debts and close these accounts, so you’re left owing only one, reasonable debt repayment per month to the credit provider who granted you the loan.
First weigh up the advantages and disadvantages.
The Pros and Cons
One of the major problems is that there are simply far more unscrupulous debt consolidation companies out there, preying on naive consumers, than there are respectable ones, especially in the current South African industry. Such companies habitually charge thousands of rands in covert fees, adding nothing but penalties, a dwindling credit rating and injured pride to the inflammatory mix.
If you have a bad credit record and can’t afford to make regular payments, this option is quite plainly not appropriate for you. You see, it was designed for individuals who pretty much have a handle on their debts, but who would benefit from a clean, simplified repayment process, for the honest purpose of making their lives easier.
Alternative Debt Solutions
If you have a poor credit score and a company is offering you debt consolidation advice, this is when your spidey senses should start to tingle. The interest rates on such a loan will obviously be high and the terms unfavourable. Too many people agree to dodgy terms out of panicky desperation, telling themselves ‘they had no other choice!’
Well, this is clearly not the case. Debt counselling does all the things debt consolidation help can’t do for you. Debt review protects your credit profile, assets and you from credit providers taking legal action against you. While debt rescue helps you become debt free in a risk-free, effective way! Contact NDA today to find out if you qualify or view more of our pages on debt review advice.