If you are in debt and have a good credit record, combining all your debts into one single consolidation loan may be the best solution for you.
A consolidation loan is an affordable way for debtors to get their finances back under control in a shorter amount of time. Advantages of taking out a consolidation loan include the following:
- Lower interest rates. Consolidation loans often have lower interest rates than other credit facilities, such as credit cards, meaning you can reduce the amount of your debt a lot quicker.
- Reduced number of payments to manage each month. Combining all of your debts into a consolidation loan means that you only have to make one single repayment, making management of your finances easier and eliminating possible late payment fees.
- Less stress. Having only one loan to manage makes the debt repayment process less chaotic and stressful.
- Full awareness of repayment amounts. You will know the exact amount of money you need to repay each month for the life of the consolidation loan.
- Improved credit rating. Taking out a consolidation loan can improve your credit rating, as you will be less likely to miss payments.
A consolidation loan will only help you, however, if you rid yourself of each credit card that the loan is paying out and maintain all of the loan repayments. It is very easy to be tempted by a credit card with a zero balance, and using the cards again will make your situation doubly worse. If your credit rating has been damaged by the debt you are currently in, you might not be approved for a consolidation loan. In this case, you would need to consider a more formal arrangement to repay your debts affordably, such as a debt agreement or a personal insolvency agreement
If you are considering taking out a consolidation loan to repay your debts, or if you have applied for a consolidation loan and been rejected, call our professional team of debt advisors today on 1800 676 598 for more information and free advice.