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Juggling too many debts?
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If you feel like you are juggling too many debts, debt consolidation can help you get on top of them. Debt consolidation involves taking out one loan to pay off others. By rolling a number of debts you may have in to one single loan with one repayment, it can make it easier to manage your debts and can save you money.
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Why consolidate your debts?
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- It makes managing your debts easier - as you only have one loan and one repayment rather than trying to keep up with multiple loans and repayments
- You could consolidate your debts on a loan with a lower interest rate, saving you money on interest.
- You could consolidate your debts on a loan with a fixed interest rate – having a fixed interest rate gives you certainty about what your loan repayments will be. If you think you simply couldn’t afford another interest rate rise, consolidating your debts in to a fixed interest rate will ensure you won’t need to worry about rising interest rates for at least the next few years. By the time the fixed period ends, you will have had time to get on top of your finances or be prepared for a further fixed term.
- It can help relieve some pressure on your everyday finances - you can choose a longer loan term to lower your regular repayments, helping you to free up some money to manage your day to day bills and expenses
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Will I need security for the loan?
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Put simply, it depends on the type of loan you choose. If you cannot secure an asset such as a property against the loan, you will need to select an unsecured loan. As secured loans have an asset that serves as collateral in the event you are unable to repay the loan, you can often secure a lower interest rate on secured loans. This is because the asset put up for collateral ensures the bank will be able to recover some of their money in the event you fail to repay the loan.
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What types of loans can I consolidate?
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- Credit cards
- Store cards
- Charge cards
- Personal loans
- Car loans
- Home loans
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What should I do if I am having financial difficulty?
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If you are struggling to repay your debts and can’t seem to get ahead, the best thing you can do is to get on top of them early by contacting your financial institution to discuss your payment options. This could involve extending the period of the loan, reducing the amount of the regular repayments, delaying payments due on a specific date or any other reasonable alternative.
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