We’ve all seen the myriad of debt consolidation advertisements on television. There is a great deal of competition in the debt consolidation market because unfortunately, lots of individuals are struggling financially and these businesses provide much needed financial relief. Mortgages, car loans, credit cards; individuals can get loans from a broad range of lenders for virtually anything these days. The issue 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 notion behind debt consolidation is that you can take all 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 some people, there are a number of benefits in consolidating your debts, and this article will take a look at debt consolidation thoroughly and the benefits they provide to give you a better understanding if debt consolidation is a good opportunity for your financial circumstances.

 

The Basics

 

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

 

High-Interest Rates

All loans have varying interest rates and terms and conditions, however, credit cards most certainly have the highest interest rates of all loans. Whilst credit card companies normally have a no interest period of around a couple of months, the interest rates after this time can rocket up to 25% or higher. If you find yourself in a situation where you’re paying 25% interest on your credit card loans, it’s very likely that your debt will cultivate much faster than you’re able to pay it off. Usually, debt consolidation can provide lower interest rates and better terms and conditions, which can save you a considerable amount of money in the long-term.

 

Too much confusion with multiple loans.

When you have a wide range of debts with different interest rates and minimum repayments that are due at different times, there’s no question that it can be very difficult to manage and can become confusing. This increases the chances of missing a repayment which can give you a poor credit report. Debt consolidation substantially helps in this scenario by merging all of your debts into one which is significantly easier to manage and gives you a clearer picture of when you’ll be debt free.

 

High Monthly Repayments

When individuals are experiencing multiple debts, it’s challenging to manage your cash flow as a result of the high minimum repayments required for each debt. Further 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 cash, your interest rates are likely to be increased, you can get a bad credit history, and your financial condition can go south considerably quickly. Debt consolidation loans provide one repayment each month, and you can arrange your monthly repayment amounts depending upon the length of time you wish your loan to be.

 

With this being said, if you’re interested in consolidating your debts, it’s vital that you undertake sufficient research to find the best debt consolidation interest rates and terms and conditions. You’ll come across a wide variety of debt consolidation companies, some are good, some are bad, and some are straight-out predatory. First of all, you’ll need to choose a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also want to inspect the terms and conditions cautiously. A number of consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees including application fees, legal fees, stamp duty and valuation. The reality is, there is a lot of research that needs to be done before you can conclude if debt consolidation is the right option for you.

 

As you can clearly see, there are a number 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 a lot of money in the long-run, and it’s possibly better for your psychological wellbeing too. This article isn’t aimed to encourage you to consolidate your debts, as it all depends on your financial state of affairs. Due to the complexity and the numerous 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 hardship. In some scenarios, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, speak with Bankruptcy Experts Gympie on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsgympie.com.au