How Does Debt Consolidation Work?
It is common for people to find themselves in a position where they have to pay off more than one debt at once. If you are struggling to balance multiple debt repayments, it is worth considering debt consolidation.
Debt consolidation is the process of taking all your current debts and putting them into one new debt. It can assist you in managing your repayments and make you feel more confident about your financial future. It is typically done by taking out a new personal loan in order to repay your other debts, and then making repayments on this loan over a set period of time.
For example, if you have three credit cards with debts of $500, $4000, and $6000, it is likely that you also have three different interest rates and are making repayments at three different times each month. This might feel complicated and overwhelming when managing your budget and bills.
You have the option to consolidate your debts by taking out one loan to pay off each credit card and any interest owed. Then, you will just need to make one repayment every week, fortnight or month over a given time — you can choose how often you would like to make repayments. If your personal loan interest rate is lower than your credit card rates, this can help you reduce your total debt.
In summary, the advantages of a debt consolidation would be a simpler management of repayments, a potentially lower interest rate, and a clear time in your head of when you’ll be debt-free.
At Debt Free Australia, we understand that the process of finding the right solution is difficult. This is why it is important to enlist the assistance of highly trained consultants who can take you through all your options and help you determine what is the best option for you. Our consultants at Debt Free Australia are experienced, professional and passionate about helping Australians recover from debt troubles to lead a better financial afterlife.
To find out more about how we can help you, call us today on our toll-free advice line on 1800 676 598.