Debt consolidation is the process of merging all your current debt into one easy to manage account so that you don’t need to juggle paying multiple creditors.
If you get behind on your account payments you will be charged late fees and penalties on each account. If you apply for a debt consolidation loan, we will contact your creditors on your behalf and negotiate a settlement fee for each one and will pay all of your current debt so that you will only need to pay back the personal loan you have with us. This will save you money as you won’t need to worry about late fees or extra charges.
To make paying back your debt consolidation loan easy we will assist you in setting up a payment plan that is easy to manage. There are two types of debt consolidation loans these are good credit debt consolidation loans this will require you to provide some sort of collateral to secure your loan. You will be at risk of losing your collateral if you default or fail to make payments.
A bad credit loan for debt consolidation requires you to sign a debt agreement which will appear on your credit record as you are applying for bankruptcy.
When should you apply for a Debt consolidation loan?
You should consider applying or a debt consolidation loan if you are having trouble making the minimum payments on your account each month and your credit card has reached its limit. If you need to take control of your finances, but you have a large amount of debt that you are struggling to manage.
What debt can I use this loan for?
A debt consolidation loan can be used to combine personal loans that you still need to pay, credit cards that have an outstanding balance, store charge cards and accounts.
Use your home to secure your Consolidation loan
There are a lot of benefits to consolidating your debt into one easy repayment. As security to make sure that you pay back the loan you will need to list an item of value to secure your loan. Your home can be used as collateral. This option can be very risky as if you do not pay back the loan you will be at risk of losing your home.
Use Debt consolidation to your advantage
If you use your debt consolidation loan correctly you can decrease your monthly payments and save money on your interest. To make sure that you use this opportunity correctly make sure that you work out a debt management plan. This will make it a lot more simple for you to budget as you will only need to make one easy payment.
Compare your loan options
Make sure that you consider all the options that are available to you. Compare the interest and initiation fee that each lender charges to find the best option to suit your needs. Look for lenders and online loans that allow you to pay back your loan early and that won’t charge you penalties. Try to cut down on spending money on unnecessary items and use these saving to help pay back your loan as quickly as possible.
The difference between Debt consolidation & Debt agreement
The difference between debt consolidation and a debt agreement is that debt consolidation is seen in the same light as a personal loan that allows you to pay off all your debt at once and only have one monthly instalment to repay.
Debt agreement like debt counselling put you under a form of bankruptcy and should only be considered as a final option as it will adversely affect your credit score and history.
Requirements & eligibility for Debt consolidation
To apply for a debt consolidation loan you will need to meet certain requirements, you will need to be at least 18 years old and be a resident of Australia, you will need to supply identification, proof of residence and employment details as well as proof of your income in the form of your bank statement.
Secured debt consolidation loans
To secure to your debt consolidation loan you can list an asset as collateral in order to get a lower interest rate on your loan agreement because you are seen as lower risk than if your loan is unsecured. Unfortunately, by listing collateral if you default on a payment you are at risk of losing your asset.
Unsecured debt consolidation loans
An unsecured quick loan to consolidate your debt might be a better option for you if you do not have an item of value to list as collateral or you are afraid of losing your house or car and do not want to risk them by taking out a loan.
Unsecured loans will come with a higher interest rate charge than a secured loan.
Fixed or variable interest rate
Another variable to consider is whether your loan will be charged at a fixed or variable interest rate. A fixed interest rate will make sure that the amount of interest that you are charged is fixed for the duration of the loan agreement. By using this option, it will be easy to budget your monthly payment.
A variable interest rate will change as the markets change and are very flexible this could save you money or cost you money depending on how the markets perform.
Although it is possible to apply for a short-term loan to consolidate debt – choosing a loan over a longer term will reduce your repayments and allow you to have extra money over at the end of each month.