Consolidating debt is a great way to improve your cash flow by saving on excessive interest and fees from numerous outstanding debts. Borrowing money is a way of life in Australia. Whether you want to buy a car, a house, go on a holiday or pay for some unexpected medical bills, chances are you will need a loan to cover the costs.
Before you know it you have a number of different loans under your belt all accruing separate interest, fees and charges. Consolidating debt is taking all your loans and rolling them into one with one set of interest and fees. The money you save can go towards paying your debt off sooner.
What is involved in consolidating your debt
When consolidating debt, there are a number of options available depending on the types of debt you have. For example you would need to take a different approach consolidating your mortgage and personal loans than if you were consolidating your credit cards.
Debt Consolidating Loans
The economy is constantly changing and the deal you got on your mortgage five years ago might not be working in your favour today. Consolidating debt is a great way to revisit your financial situation and look for ways to save money. You might have a mortgage and a couple of personal loans, each with their own interest and their own set of fees. Consolidating debts with a Debt Consolidation loan can help you save on interest and fees.
To consolidate your loans, you would approach either your existing lender or a new lender and see if you can borrow enough to pay out your existing debts. Then you will be left with a single loan repayment with one interest rate and one set of fees.
Before you decide to consolidate your debt you should make sure you existing loans don’t have any fees for breaking the loan or leaving it early. Sometimes the money you can save on interest is wasted on fees so be sure to do your research.
Consolidating Credit Card Debt
Credit cards are very easy to come by and seem like a saving grace for people who are struggling with their finances. Some people can end up with 5 or 6 maxed out credit cards before they realise they need help with their debt. If you would like to reduce your credit card debt quickly, you can consolidate credit card debt it onto one card.
There are many banks these days who offer great incentives for consumers to transfer the balance of their cards to them. These incentives include a low or no interest period, an ongoing low interest rate or no annual fees. To consolidate credit card debt quickly, transfer the balance of your cards to a card with an interest free period on balance transfers. Then cut up all your other cards and pay as much as you can off your card before the interest free period ends.
Be sure to read the fine print on each of your credit cards before making any decisions.
People look at consolidating debts to improve their cash flow and financial situation. However sometimes, a person might already be struggling with debt and their credit file is reflecting their rocky financial situation. A bad credit file can have an impact on your ability to secure a debt consolidation loan. But there are a number of lenders out there willing to give people a second chance.
Through Positive Solutions Finance, we can assist people with a bad credit rating find a potential lender for a debt consolidation loan. Positive Solutions Finance does not lend money, but rather calls on a number of affiliated lenders who specialise in the ‘grey area’ of finance. Through these channels, Positive Solutions Finance can find the right loan for you.
When consolidating debt isn’t enough
If you have tried consolidating debt and you find you are still struggling to make ends meet, you might need to consider a more direct approach to reducing your debt. Debt Rescue offers a number of debt relief solutions catering to people at all stages of debt. We can assist with Budgeting, Debt Agreements and Bankruptcy.
For more information on consolidating debt or if you would like to explore your options, give Debt Rescue a call today and Talk to an Aussie Who Caresâ„¢.