Debt consolidation loans – are they the answer to your financial woes?
What are debt consolidation loans? The word CONSOLIDATION effectively means the the action or process of combining a number of things into a single more effective or coherent whole.
It is for this reason many people seek one loan to cover all of their debt with one monthly payment – but how beneficial are these consolidation loans to those who are already over-indebted?
Here are a few important points to note regarding debt consolidation loans:
- You are actually just paying your old debt with new debt.
- They are very rarely cheaper (with regards to interest rates).
- You will have to pay an initiation fee on the consolidation loan.
- Your credit score will improve – but if you access more credit, whilst still having your large consolidated payment to make – the chances are good that you will be over-indebted.
- If you are in arrears with your accounts, you will not be able to qualify for a consolidated loan. You need a clean credit record to apply for a consolidated loan.
What other options are available for consolidation of your debt repayments?
- A consolidation loan is NOT your only option for your debt.
- You can consolidate your debt repayment by opting for debt review.
- You still only pay one amount at month end.
- Your interest rates are lowered.
- Your term is extended.
- Whilst paying only one lower monthly installment, your assets are protected from repossession and you are shielded from the harassment by debt collectors and creditors.
Covid-19 and the lockdown has affected every household around the globe. Now more than ever, it is time to get a handle on our finances. Now more than ever, we have to draw up a budget and stick to it – and we have to equip ourselves with as many financial options and solutions as possible.
For more information on how to consolidate your debt repayments into one affordable monthly amount – please fill in our contact form and one of our consultants will get back to you.