Are your debts piling up?
Debt Refinancing and Debt Consolidation are two ways you can rearrange your debts in order to save money and improve your cash flow. As you travel through life, you tend to accumulate certain debts like credit cards, personal loans, car finance and a mortgage.
As you take on more and more debt it can be hard to keep track of the repayments. You also need to juggle a number of different interest rates and fees. This is where debt refinancing or debt consolidation can come in handy.
What’s the difference between refinancing and debt consolidation?
Debt Consolidation is when you take out one loan and borrow enough money to pay out your existing debts. Then you are left with a single Debt Consolidation Loan with one regular repayment, one set of interest and one annual fee. By paying out all your existing loans you are ridding yourself of excessive interest rates and therefore reducing your overall debt amount. Then by focusing all your money into one loan repayment, you will be able to reduce the life of your debt and pay it off sooner.
Joseph has 1 personal loan with $24,000 left to pay and he is paying 13.90% interest. He also has 2 credit cards – one owing $3500 charging him 18.99% interest and one owing $5400 charging him 19.84% interest.
Joseph is currently paying the minimum repayments on his personal loan which is $130 a week, $30 off one credit card and $50 off the other. With these repayments, Joseph will end up paying $45,612 to finalise his debts and it will take him 3 years for his credit cards and 5 years for his loan.
Joseph used a debt consolidation loan to consolidate his debts into one regular repayment. He borrowed $32,900 to pay off his debt with a 12.54% interest rate. Putting the $210 in repayments towards his new loan he will end up paying $41,961 in just under 4 years.
That’s a saving of $3,651.
Debt Refinancing is when you take a single loan, such as your mortgage, and negotiate new terms. This may be with the existing lender, or with a new one. Refinancing your loan has the potential to do several things, depending on your situation and your negotiation. It could reduce your interest, extend the length of your loan or even reduce your regular repayments.
Refinancing & Debt Consolidation to get out of debt
While Debt Refinancing and Debt Consolidation are great ways to reduce your debts and improve your cash flow, they are actually quite difficult to do if you are in financial hardship. If you have fallen behind on your loan repayments, or are unable to pay your bills, it is unlikely a bank or major lending institution will approve you for a new loan.
Our affiliate partner, Positive Solutions Finance, specialises in helping people in the grey area of finance to find a loan. Whether you are looking to consolidate with a bad credit rating or you want to refinance your home after coming out of a Debt Agreement, Positive solutions Finance will draw on a panel of non-conforming lenders to help find the right loan for you.
If your debts are quite serious, there are a number of debt relief solutions available to you before you have to declare bankruptcy. These include a Debtstroyer Agreement, a Part 9 Debt Agreement or even just a budget and some money management advice.
Debt Consolidation - Getting Finance with Bad Credit
How to Refinance or Consolidate my Debt
If you still aren’t sure if refinancing your loan or using debt consolidation would help you to improve your financial situation give us a call on 1800 00 3328. You can have a no obligation chat with one of our experienced case managers about your financial situation.
Our case managers are experts in the debt management field. Unlike other debt relief providers, Debt Rescue offers a huge range of services from budgeting advice to consolidation, debt agreements and bankruptcy. Offering such a large range of services, we won’t push one solution on you if it isn’t suited to your circumstances. Instead we will listen to you, find out what you need and tailor make a solution to fit with your life.
If Debt Consolidation or Loan Refinancing is the best course of action for you we can help you start the application process and put you in touch with Positive Solutions Finance to access a panel of lenders who believe in offering second chances.
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