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Debt consolidation loans – are they the answer to your financial woes?

by | Oct 29, 2020 | Personal Finance

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.

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