Most of us have seen the myriad of debt consolidation advertisements on TV. There is plenty of competition in the debt consolidation market because sadly, many people are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; individuals can obtain loans from a wide range of lenders for virtually anything nowadays. The problem 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 idea 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 simpler and gives you a far 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 examine debt consolidation thoroughly and the advantages they provide to give you a better understanding if debt consolidation is a good alternative for your financial situation.

 

The Basics

 

Debt consolidation allows you to settle all your current debts with a new loan that generally has different (and in most cases more desirable) interest rates and terms and conditions. There are a range of reasons why individuals use debt consolidation services.

 

High-Interest Rates

All loans have varying interest rates and terms and conditions, however, credit cards likely have the highest interest rates of all loans. Whilst credit card companies normally have a no interest period of approximately a couple of months, the interest rates after this time can surge 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 very likely that your debt will increase much faster than you’re able to pay it off. Commonly, debt consolidation can provide lower interest rates and better terms, which can save you a considerable amount of money in the long-term.

 

Too much confusion with multiple loans.

When you have a number of debts with varying interest rates and minimum repayments that are due at different times, there’s no doubt that it can be difficult to manage and can become confusing. This increases the likelihood of overlooking a repayment which can give you a poor credit history. Debt consolidation greatly helps in this situation by merging all of your debts into one which is much easier to manage and gives you a clearer picture of when you’ll be debt free.

 

High Monthly Repayments

When people are grappling with multiple debts, it’s challenging to manage your cash flow as a result of the high minimum repayments required for each debt. In addition 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 in the bank, your interest rates are likely to be increased, you can get a poor credit rating, and your financial state can go south particularly quickly. Debt consolidation loans provide one repayment every month, and you can arrange your monthly repayment amounts based upon the length of time you wish your loan to be.

 

Nonetheless, if you have an interest in consolidating your debts, it’s paramount that you conduct suitable research to find the best debt consolidation interest rates and terms and conditions. You’ll notice there’s a wide variety of debt consolidation companies, some are good, some are bad, and some are straight up predatory. Firstly, you’ll want to opt for a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also need to inspect the terms and conditions diligently. A number of consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees such as application fees, legal fees, stamp duty and valuation. The reality is, there is a considerable amount of research that needs to be done before you can determine if debt consolidation is the right option for you.

 

As you can clearly see, there are a range of benefits related to debt consolidation for individuals that are struggling financially. Lower interest rates and fees, lower monthly repayments, and less confusion with multiple debts can save you loads of money in the long-run, and it’s possibly better for your psychological wellbeing too. This article isn’t intended to convince you to consolidate your debts, as it all depends on your financial situation. 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 difficulty. In some situations, declaring bankruptcy is a better alternative, so before you make any decisions about your financial future, talk to Bankruptcy Experts Albury on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsalbury.com.au