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If you’re struggling with managing your debt, you may be considering debt counselling or a debt consolidation loan as possible solutions to ease the financial strain. It is important to understand the difference between these two debt solutions, as although both are aimed at making managing your debt easier, they are two differently designed processes....
Debt consolidation is a loan that you would take out to consolidate several smaller loans into one loan. Basically, paying off the balances of all the other loans. The goal of a consolidation loan is to reduce monthly instalments usually by means of lower interest rates and extended payment terms.
The SARB increased interest rates in March 2016 in an attempt to curb inflation in South Africa. As a result the cost of borrowing money increased as well, leaving over-indebted consumers feeling even more stretched to make ends meet.
Winter is just around the corner and your spending patterns usually change during the colder months. This makes sticking to your monthly budget a bit of a challenge (who can resist those warm soups in the pouring rain).
Taking a Debt Consolidation loan could be an effective method for debt re-financing. It involves taking out one larger loan to settle many others. It is a financial solution designed to simplify multiple debt repayments and, under some circumstances, save the debtor money.
At DebtBusters, we know that it can difficult to manage your finances, especially if you’re already in a sticky situation. The good news is that with debt consolidation; you could make paying your debt in 2016 a little easier for yourself.
Most credit active consumers think the best way to settle debt is by taking out a consolidation loan. Consolidation loans do not settle debt, they merely group up your debt obligations into one new loan amount. The benefit is one monthly repayment with one interest amount as opposed to paying varying interest rates across multiple debt obligations. When you take out a consolidation loan, the amount borrowed is used to settle your old debt obligations, leaving only the consolidation loan for you to repay each month. In summary, a consolidation loan pays multiple old loans with another bigger new loan. You are essentially paying old debt with new debt.
It is half past three in the morning and Viwe cannot fall asleep. Ever since she was a student at university, using credit has been a fast and efficient way to fund her entertainment and living expenses. Now, five years after graduating, she is kept awake by what feels like a never-ending nightmare. Viwe is caught in a debt trap and needs a bad debt consolidation loan! Each month Viwe has to find enough money to pay her many accounts. She juggles things around, paying one this month, skipping next month to pay another; robbing “Peter to pay Paul” and borrowing more to avoid legal action. All of this leaves her feeling confused and dizzy. By the next month she doesn’t know what is left in her bank account and can’t remember who she has paid and who she owes! With each month and year that has passed, Viwe has missed many of her monthly instalments to various credit providers and has started to accumulate additional interest and fees on her accounts in arrears. Her credit score has been severely impacted and she can no longer get credit. She is trapped!
Repossession is the final stage of legal action and is most commonly seen with assets accounts (house, vehicle or furniture). If there has been a deviation from the required credit agreement, credit providers have the right to proceed with legal action to allow them to recuperate the outstanding debt.
The first ever Debt Review Awards was held on 19 July 2014 in Cape Town, to celebrate business excellence in debt review and to make heroes out of those who are responsible for leading the industry. Credit providers, debt counsellors and payment distribution agencies from South Africa were nominated in order to ensure that all parties in the industry were acknowledged for their efforts.
Every day companies reject thousands of loan applications. Wonga’s CEO Kevin Hurwitz admits that the short term loan provider rejects between 65-75% of all new customers. So if you have received a rejection letter you are not alone.
Always looking for new ways to help assist South African consumers facing financial difficulty and tor educe the levels of over-indebtedness in South Africa, Ian Wason later founded DebtBusters in 2008.