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Is a Debt Consolidation Loan Your Best Option?

By Administrator 19 February, 2016

Debt consolidation, otherwise known as ‘refinancing’, is one of the many personal debt solutions available to help financially distressed Australians overcome their debt issues.

People normally pursue debt consolidation loans for two main reasons;to secure a lower interest rate, and/or to reduce the number of payments needed to manage each month.

But how well do debt consolidation loans really weigh up in comparison to other personal debt solutions?

Despite its perceived benefits, it is important that before you go ahead and apply for a debt consolidation loan, you compare the repayments and rates of interest of your current debts and see how they compare. Whilst debt consolidation loans may be sold as a highly effective debt solution, without careful assessment of the loan and its requirements you may find yourself taking out a loan you cannot afford, causing your finances to deteriorate. And because you are attempting to pay off many debts at once, you may find that the term of a consolidation loan is quite lengthy.

An alternative solution is a Debt Agreement or Personal Insolvency Agreement,both of which allow insolvent Australians enter into an arrangement with their creditors to negotiate a personalised payment plan to settle their unsecured debts. These personal debt solutions often see creditors agreeing to reduce the outstanding debts to be repaid, and can allow for more flexible payment periods. For example, if you owe $100,000 in unsecured debt, it is possible that with Debt Free Australia your debts can be reduced to as little as $60,000 (plus costs and fees for administering the Agreement).

Because they are legally binding on all creditors and allow you the opportunity to negotiate your debts to more achievable terms, entering into a Debt Agreement or Personal Insolvency Agreement can be considered as one of the most effective options for Australians experiencing financial difficulty.

For more information, or to find out if you’re eligible for a Debt Agreement or Personal Insolvency Agreement, give Debt Free Australia a call today on 1800 676 598. Our toll-free hotline is open 24/7 so that we’re available to talk anytime you need.