We’ve all seen the myriad of debt consolidation advertisements on television. There is a considerable amount of competition in the debt consolidation market because sadly, lots of people are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; individuals can get loans from a wide variety of lenders for virtually anything these days. The problem is that all these loans are hard 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 each of your existing debts together and consolidate them into one, easy to manage loan that is easier and gives you a much clearer picture of your financial future. For many individuals, there are a variety of advantages in consolidating your debts, and this article will explore 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 condition.

The Basics

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

High-Interest Rates

All loans have varying interest rates and terms and conditions, however, credit cards most certainly have the highest interest rates of all loans. Although credit card companies commonly have a no interest period of approximately a couple of 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 more than likely that your debt will cultivate much faster than you’re able to pay it off. Usually, debt consolidation can provide lower interest rates and better terms, which can save you a huge amount of money in the long-run.

Too much confusion with multiple loans.

When you have various debts with varying interest rates and minimum repayments that are due at different times, there’s no question that it can be difficult to manage and can become confusing. This increases the chance of missing a repayment which can give you a bad credit report. Debt consolidation dramatically helps in this scenario by combining all of your debts into one which is notably easier to manage and gives you a clearer picture of when you’ll be debt free.

High Monthly Repayments

When people are facing multiple debts, it’s challenging to manage your cash flow due to the high minimum repayments required for each debt. On top of this, different debts have different repayment dates and this can cause people to struggle just to make ends meet. If you miss a repayment because you simply don’t have the money, your interest rates are likely to be increased, you can get a bad credit rating, and your financial situation can go south particularly quickly. Debt consolidation loans provide one repayment every month, and you can arrange your monthly repayment amounts according to the length of time you wish your loan to be.

Despite the benefits, if you’re interested in consolidating your debts, it’s critical that you conduct adequate research to find the best debt consolidation interest rates and terms. You’ll uncover a wide variety of debt consolidation companies, some are good, some are bad, and some are straight-out predatory. Firstly, you’ll need to select a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also need to assess the terms and conditions diligently. Certain consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees for example application fees, legal fees, stamp duty and valuation. The fact is, there is a considerable amount of research that needs to be done before you can decide if debt consolidation is the right option for you.

As you can obviously see, there are a lot of benefits associated with debt consolidation for people that are struggling financially. Lower interest rates and fees, lower monthly repayments, and less confusion with multiple debts can save you a great deal of money in the long-run, and it’s most probably better for your mental wellbeing too. This article isn’t aimed to encourage you to consolidate your debts, as it all depends upon your financial circumstances. As a result of 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 circumstances, declaring bankruptcy is a better solution, so before you make any decisions about your financial future, talk to Bankruptcy Experts Rockingham on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertsrockingham.com.au