Are you currently feeling swamped with personal debt? Finding it difficult to stay afloat? Do you have little money left to yourself after paying the bills each month?
Don’t wait until you have out-of-control debts. Multiple debts such as personal loans, credit cards and mortgage repayments can be consolidated by rolling all of your existing personal debts into one, easy-to-manage loan. Debt Consolidation can help you better manage your debt repayments, reduce the interest you have to pay and the associated fees.
What You Need to Know Before Consolidating Your Debts
- Talk to your creditor - You can ask them to change your repayment schedule to suit your needs, or to extend your loan.
- Consider switching your home loan - A different home loan could save you money in interest and fees.
- Transfer your credit card balances - A balance transfer can help you get on top of your debts by transferring all of your credit card balances into one.
- Consider selling your home - If you are struggling with mortgage repayments, selling your home on your own terms will give you a better return than if it’s sold as a mortgagee sale.
Pros of Debt Consolidation Loans
- Single repayment - Consolidates your unsecured loans into one, single secured loan repayment.
- Reduce costs - Reduces your overall debt payments and costs such as interest rates and fees.
- Stops debt collectors - No more harassing phone calls from debt collectors as long as you have only one affordable payment to manage.
Cons of Debt Consolidation Loans
- Dive deeper into debt - You may increase your debt if you fail to make repayments.
- Fees and charges - There may be fees or charges incurred for breaking your existing loans which you will need to pay.
- Losing your home - Make sure to pay the new consolidated loan repayments when they fall due, otherwise you could risk losing your home.
Which Debts Can You Consolidate?
- Personal loans - You can take out a debt consolidation loan to consolidate two or more separate personal loans, one personal loan and another type of credit (such as a credit card), or to refinance a personal loan to one with a lower interest rate and associated fees.
- Credit cards - A debt consolidation loan can combine multiple outstanding credit card debts and reduce the cost of fees and charges. This might also be an option if you aren’t a candidate for a credit card balance transfer.
- Store and charge cards - Store and charge cards are similar to credit cards and their balances can easily increase, making them another type of debt you can consolidate.
Debt Consolidation Checklist
- Compare interest rates, fees and charges - make sure you will be paying less for your consolidation loan. Compare the costs of the new interest rate, fees and charges against your current loans.
- Check the terms and conditions - be aware of the possibility of longer loan terms. Even if the interest rate is lower on the new consolidation loan, if you can only pay it off over a long period of time you will still end up paying more in interest and fees.
- Validate the company - Check to make sure the lender/broker who you wish to initiate your consolidation loan is licensed and operating legally. You can do this by searching the Australian Securities and Investments Commission (ASIC) Professional Registers.
5 Steps to Consolidating Your Debts
- Calculate how much you will need to borrow to cover all of your current personal debts, including any fees and charges you might need to cover in order to pay off your existing debts early. You can do this by using our Debt Consolidation Calculator.
- Research and compare debt consolidation loans. Find the loan that will suit you the best.
- Apply for the debt consolidation loan.
- Watch as your multiple debts are consolidated into one, simple loan.
- Continue to make repayments on your consolidation loan on or before the due dates until it has all been repaid. Don’t risk losing your home over missing loan payments.
Informal Options If You’re Struggling with Unsecured Debts
If you’re drowning in unsecured debts and a debt consolidation loan isn’t the right option for you, an informal debt agreement might be best. An informal debt agreement is an agreement between you and your creditors to change the terms on your existing debt contracts to reduce your debt without dealing with the consequences of a Part 9 Debt Agreement or Bankruptcy. You’ll be able to settle on a new, affordable repayment schedule.
At Lanyana Financial Group, we call our informal debt agreement a Debtstroyer agreement. Each Debtstroyer agreement is tailored to suit your individual needs and is based on your personal financial situation. A Debtstroyer agreement will immediately reduce your repayments, pause your interest, protect your credit rating and give you more time to pay off your debts in one easy, regular payment.
Lanyana Financial Group offers a range of services designed to help you reduce your debt. We pride ourselves with having an experienced team on hand to answer any questions you may have. Please call us today for a confidential chat on 1800 534 534.
First published on Positive Solutions Finance.