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.
20 April 2016
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). You will also notice that you spend more on electricity, warmer clothing and medication. Managing your personal needs through winter can be costly, especially when in addition to a mounting number of debt repayments, which when all put together, can easily become a frustrating affair.
Don’t be left in the cold. A debt consolidation loan could be your answer to a stress free winter!
What is a debt consolidation loan?
A debt consolidation loan is usually taken out by people who are struggling to manage all their monthly account payments. This is a loan which is used to settle all your accounts, leaving you with only one consolidated loan amount to pay off. A consolidation loan can prove to be a viable method of debt re-financing and if done properly, can save you some money.
Key indicators to show you need a debt consolidation loan:
- When most of your income is used for servicing your debt
- When you are taking out additional loans to pay for existing debt
- When you are struggling to keep track of your monthly expenditure
- When you lose track of which credit providers you are paying monthly
What a debt consolidation loan can do for you:
- Enjoy a reduced instalment paid to creditors, thus increasing your affordability
- BIG savings on service costs, administrative fees, debit order charges and insurance costs by not having to service multiple accounts
- Simplified repayments of debt to one creditor monthly as compared to paying multiple accounts
- Your property will not be at risk if the debt consolidation loan is done as an unsecured loan. For example, your house will not be attached to the loan in the event that you fail to pay your instalments.
DebtBusters is there to help you every step of the way, what are you waiting for, call 086 999 06 06 or fill in our call back form and speak to a consultant to see if you qualify for a consolidation loan.