When you have multiple debts, it can be stressful trying to keep them all under control, and can put pressure on your family and other areas of life. Many of us have personal loans, car loans and credit cards, which we pay off each month, often to different financial institutions. This means you could be paying more than you need to be.
Debt consolidation can be a great option for those who are looking to have all their debt in one place as well as potentially reducing the interest rate and monthly repayments.
Consolidating could potentially give you lower weekly, monthly or fortnightly repayments as well as a lower interest rate. Having all your repayments rolled into one will allow for better management of your debt.
With only one monthly repayment being made, you will also be able to keep track of the amounts coming from your account and have a clearer vision of where your financial future is heading. If this is a consideration we suggest that you speak with your bank, accountant or a financial planner.
Like with most credit, an application will need to be put through for debt consolidation so it helps to have a good credit rating to maximise the chance of approval. If credit cards are part of the consolidation, it may be beneficial to close the accounts to prevent further costs.
Typically, debt consolidation is done by amalgamating all debt into a single personal loan with one payment and one interest rate, making it more affordable and easier to keep track of.