Nearly all of us have seen the plethora of debt consolidation ads on TV. There is a huge amount of competition in the debt consolidation industry because sadly, lots of people are struggling financially and these companies provide much needed financial relief. Home loans, car loans, credit cards; people can acquire loans from a vast range of lenders for pretty much anything in today times. The trouble is that all these loans are difficult to manage and if you fall behind in your monthly repayments, you can end up in a lot of trouble.

 

The idea behind debt consolidation is that you can take all of your existing debts together and consolidate them into one, easy to manage loan that is simpler and gives you a much clearer picture of your financial future. For many individuals, there are a range of benefits in consolidating your debts, and this article will take a look at debt consolidation in detail and the advantages they provide to give you a better understanding if debt consolidation is a good choice for your financial situation.

 

The Basics

 

Debt consolidation allows you to settle all your current debts with a new loan that often has different (and in many cases more attractive) interest rates and terms. There are numerous reasons why people use debt consolidation services.

 

High-Interest Rates

All loans have varying interest rates and terms, however, credit cards probably have the highest interest rates of all loans. While credit card companies commonly have a no interest period of approximately one or two 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 highly likely that your debt will cultivate much faster than you’re able to pay it off. Often, debt consolidation can provide lower interest rates and better terms and conditions, which can save you plenty of money in the long-term.

 

Too much confusion with multiple loans.

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

 

High Monthly Repayments

When individuals are being confronted by multiple debts, it’s hard to manage your cash flow because of the high minimum repayments required for each debt. Further to this, different debts have different repayment dates and this can cause individuals to struggle just to make ends meet. If you miss a repayment because you simply don’t have the cash, your interest rates are likely to be increased, you can get a poor credit report, and your financial circumstances can go south very quickly. Debt consolidation loans provide one repayment every month, and you can negotiate your monthly repayment amounts based on the length of time you want your loan to be.

 

With that being said, if you’re interested in consolidating your debts, it’s essential that you do adequate 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 up predatory. Firstly, you’ll want to choose a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also need to take a look at the terms and conditions cautiously. Certain consolidation loans can be secured against your home or other assets, and you may be required to pay extra 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 decide if debt consolidation is the right option for you.

 

As you can evidently 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 considerable amount of money in the long-run, and it’s most probably better for your emotional wellbeing too. This article isn’t aimed to persuade you to consolidate your debts, as it all depends on your financial circumstances. 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 distress. In some instances, filing for bankruptcy is a better alternative, so before you make any decisions about your financial future, get in touch with Bankruptcy Experts Hervey Bay on 1300 795 575 or visit their website for more information: www.bankruptcyexpertsherveybay.com.au